HOW TO INCORPORATE A "C" CORPORATION?

A “C” Corporation is the most common corporate structure. It provides personal limited liability protection to its shareholders.

WHAT IS A “C” CORPORATION

A general corporation, also known as a “C” corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or large public stock offerings. Since a corporation is a separate legal entity, a stockholder’s personal liability is usually limited to the amount of investment in the corporation and no more.

STARTING A “C” CORPORATION

In order to Incorporate a C Corporation, “Articles of Incorporation” have to be prepared and filed with the Secretary of State where the business is going to operate. The Articles of Incorporation are the main filing document which begins the corporation’s existence under state law. Once filed, the corporation comes into existence.

The articles of incorporation spells out certain minimum information about the corporation that is required by the laws of the state. It may also contain specific information about the corporation that needs to be made public record, like restrictions on the transfer of stock.

More information about C Corporations can be found at Frequently Asked Questions about C Corporations.

Generally, most jurisdictions require Articles of incorporation to contain, at a minimum, information about the following:

  • Corporate Name
  • Business address
  • Main activity of the company
  • Quantity and value of the shares of stock
  • Name and address of the Registered Agent.
  • Name and Address of initial Directors.

HOW MUCH DOES IT COST?

The cost of incorporating a business entity has two main components: State filing fee and ActiveFilings’ fees. State filing fees are also based on the type of entity, processing speed and other services offered by the states.

ActiveFilings.com offers 3 different incorporation packages at very competitive prices. Additionally, we can prepare your bylaws or operating agreement, obtain a Tax ID (EIN), prepare your organizational resolutions or provide you Registered Agent services in all US main jurisdictions.

All this information is available here. Select your State and Type of entity from the following list to have instant information:

  

Starting a Corporation FAQ

What Is A Corporation?

The IRS, not the state, classifies corporations according to how they want to be taxed. There are two types of corporations according to the IRS, either “C” corporations, named after Subchapter C of the tax code, or “S” corporations, named after Subchapter S of the tax code. C corporations have their own tax identification number and pay their own taxes.

What are Articles of Incorporation?

A Corporation’s “Articles of Incorporation” is the main filing document which begins the corporation’s existence under state law. Once filed, the corporation comes into existence.

The articles of incorporation declare the desire of an individual or group to become a corporation. It spells out certain minimum information about the corporation that is required by the laws of the state. It may also contain specific information about the corporation that needs to be made public record, like restrictions on the transfer of stock.

What are Corporate Bylaws?

Bylaws are rules for the corporation that specify things such as the number of votes required to pass a matter put before the corporation, and the requirements to be met before a shareholder can sell his or her shares, among other things. Bylaws do not need to be filed with the State. They are created solely for the corporation and it’s shareholders.

What Shareholders do?

The shareholders of the corporation have a financial investment in the corporation, i.e. they paid for stock which the corporation in turn uses for capital to run its business. As such, the shareholders elect the board of directors.

What Directors do?

The board of directors manages the corporation and make business decisions. They in turn choose the officers (President, Vice President, Secretary, and Treasurer), whose responsibility it is to run the day-to-day operations of the corporation.

How many Directors, Shareholders and Officers does a corporation need?

Generally speaking, most states allow one individual to hold all offices. This is called a close corporation.

Can the same person be the shareholder, director and all officers of a corporation?

While jurisdictions will vary in their requirements, most states require that there be at least one director and two officers, in a general, for a for-profit corporation. The required officers are President and Secretary. Most states allow one natural person to hold both offices and be the sole director of the corporation. Usually, that one person may also be the sole shareholder. A corporation may not be a director of another corporation.

What is a Corporate Officer?

While most jurisdictions allow the same person to act in all capacities, that person has different responsibilities depending on the capacity in which he or she is acting.

  • President
  • Vice President
  • Treasurer
  • Secretary (or clerk)
  • Assistant Secretary
  • Assistant Treasurer

What are Shares of Stock and how are they used?

Shares of stock are written articles that represent the amount of money invested in the corporation by an individual shareholder. The corporation determines, at the outset of incorporating, how many shares it shall issue and what classes of shares (No Par, Par, Common, Preferred, Participating, etc.) it will issue. Each share represents ownership in the company, and it entitles the holder to certain types of rights (voting rights, dividends, etc.).

How Many Shares of Stock are Required?

A corporation can’t be a corporation without at least one share of stock. So you must have at least one shareholder, and one share of stock. You can have (authorize) as many shares of stock as you want, however, this may increase your filing fees in some cases.

What is the difference between “par” and “no par” stock ?

Par value stock has a stated value on its face. No par value stock has no stated value and its worth depends on what an investor is willing to pay