FAQ's: C-corporation

What is a C-corporation?

A C-Corporation, is the most common corporate structure. The C-Corporation is a separate legal entity owned by the shareholder(s). Because of this, the shareholders cannot be held personally responsible for the debts of the corporation. The shareholders’ personal liability is typically limited only to the amount the shareholder invested in the company.View our State Specific Information page for details specific to your state.

Who can form a C-corporation?

Anyone can form a C-Corporation. There is no age, residency or other legal requirement. There are states that require the directors of a corporation be a certain age. View our State Specific Information page for details specific to your state.

What paperwork is required to form a C-Corporation?

When creating a C-Corporation, Articles of Incorporation or a Certificate of Incorporation must be prepared and submitted to the respective Department of State for filing. The information required in the formation document varies per state. When forming your company we will request the mandatory information from you in order to complete the filing. View our State Specific Information page for details on what information is required for your filing.

How many people are needed to form a corporation?

To form a C-Corporation, only one officer, shareholder, and director is required and the positions can be held by one individual. You can have as many or a little or as many people as you want but some states have restrictions on the number of directors that you can have based on the number of shareholders the company has. When Accumera forms your company we will act as the initial incorporator.

What is double taxation?

Double taxation is when a C-Corporation is taxed at both a business and individual/personal level. Basically, the corporation pays tax on the profits made, then any disbursements to the shareholders are taxed at their individual income level. S-Corporations are not taxed in this manner and is why S-Corporations are popular. We suggest that you speak with your tax professional to determine if your C-Corporation should elect S-Corporation tax status.

What are authorized shares of stock?

Authorized shares of stock is the total amount of shares that the corporation has the authority to disburse to the shareholders of the corporation. The authorized shares of stock is listed in the Articles of Incorporation or a Certificate of Incorporation. You are not required to disburse all of the shares after your company is formed. You can reserve some to give out at a later time to certain shareholders in order to give some shareholders more of an advantage over the corporation.

How many shares of stock should my Corporation have?

When Accumera forms your company we will automatically authorize 200 shares of stock for your company. This is normally enough for business to run properly. If you wish to issue more stock it is certainly allowed but it may result in a higher filing fee when filing.

What is a share’s par value?

A share’s par value is the minimum value of the stock. Most shares of stock have a $.01, $1.00, or no par value. For public companies, the value of the stock depends on how much investors are willing to pay. For private companies, the par value is based on the overall value of the company.

What is the organizational structure of a Corporation?

C-Corporations are organized by shareholders, directors, and officers. The shareholders, own the company and elect the directors who are the ones who are in charge of the decision making for the company. The officers of the company are elected by the directors are the ones that are in charge of managing the everyday operations of the company.

How many directors should my Corporation have?

In most states, only one director is required, you can have more than one though. Other states base how many directors are needed by how many shareholders the company has. View our State Specific Information page for details specific to your state.

Does my C-Corporation need a registered agent?

In most states your C-Corporation is required to have a Registered Agent who can accept service of process on behalf of the company. If required your company must have a Registered Agent in every state where your company is registered. Further, you must maintain the Registered Agent with the Secretary of State in order to keep your company active. Accumera can provide you with registered agent services as required in your state.

What are Corporate Bylaws?

The corporate bylaws is a document that states the internal rules and regulations for how your corporation will operate. Each state has different requirements for what must be included in the corporate bylaws. Included with Accumera’s corporate kit are state specific bylaws that you can use for your company. Please note that corporate bylaws do not get submitted or filed with the respective Department of State.

Am I required to hold annual corporate meetings?

States require that all corporations hold annual meetings with shareholders and directors and record the minutes of each meeting. The method and date on which these meetings are held is typically recorded in the corporate bylaws. These meetings are held to elect new directors or officers and discuss any other business the company has. By following this formality the corporation will maintain its corporate identity/protection. Contact us if you would like assistance with drafting your annual corporate minutes.