Incorporate Online - Form a C Corporation
Before you incorporate, there are some things that you should know about a C Corporation.
C Corporations are authorized by state law and must satisfy certain formal requirements for legal recognition. The owners of a C Corporation are the Shareholders (or Stockholders). The Shareholders do not manage the Corporation. Instead, they elect a Board of Directors who is responsible for fundamental corporate policy. The Board of Directors appoints the officers of the corporation. Under most State’s laws, the officers must include a President, a Secretary and a Treasurer along with such other officers as the Board of Directors determines.
A corporation is a separate entity from its owners and can provide the shareholders, directors and officers with protection from personal liability in the event that the corporation is sued.
A C Corporation may issue various types of stock for the purpose of allocating control or varying the nature of the shareholders’ potential risks and return on investment. The most frequently used classes of stock are “common” and “preferred”.
As a separate entity for tax purposes, the C Corporation reports all income, losses, deductions, and credits on a corporate income tax return and pays tax at the corporate rates prescribed in the Internal Revenue Code. Shareholders are not taxed unless they receive dividends or other distributions.
It is the potential for double taxation, the ability to issue various types of stock and the lack of restrictions on stock ownership in a C Corporation that primarily differentiates a C Corporation from an S Corporation.