Our reviewers evaluate products and services based on unbiased research. Top Consumer Reviews may earn money when you click on a link. Learn more about our process.

What Is A C-Corporation?

Thursday, January 21st

What Is a C-Corporation?

The business owner has a range of choices when it comes to legal structure. An individual, such as a shop owner, contractor or freelancer can create what is called a sole proprietorship. If you go into business with one or more others, you may decide to create a partnership. Should you choose to incorporate, however, you can go one of two ways: You can choose to form an S-corporation or a C-corporation.

So what is a C-corp?
A C-corporation is a structure most common to larger organizations that can also suit smaller ones. C-corp status offers tax and other advantages but also imposes a lot of administrative requirements on the business owner(s). Some states require more of the C-corporation than others. Generally speaking, however, the formulation of by-laws and articles of incorporation, the election of a board of directors, and scheduling and recordkeeping relative to directors' and shareholders' meetings are requirements.

Separate Entity
One thing that distinguishes the C-corporation from the sole proprietorship is that a C-corporation exists separately from its owners. This means that if the company is sued or goes into debt, the assets of the owner(s) will not be vulnerable. Forming a C-corporation can mean the difference between worrying about exposing your personal assets to claims from creditors, or allowing yourself to sleep peacefully at night.

Taxation
To establish that separate identity, a C-corporation is given its own tax identification number by the Internal Revenue Service. On the downside, the profits of a C-corporation are taxed twice: The corporation itself is taxed when its returns are filed. Shareholders who receive dividends are also taxed when they fill out and submit their individual returns. On the upside, C-corporations can deduct the cost of any fringe benefits they provide to employees when the corporate return is filed. This can make offering fringe benefits more affordable. A healthy program of fringe benefits may enable the business to attract more qualified employees.

Stockholder Matters
In addition, a C-corporation can raise capital by selling stock, something a sole proprietorship or partnership cannot do. In some instances, this capability may make it easier to raise financial backing. The administrative structure that accompanies C-corp status can prove to be a negative. Regular shareholder meetings must be held -- once a year at least -- and minutes must be recorded. Each corporation must have its own president, secretary and treasurer. Shareholders must elect a board of directors who are required to meet regularly and vote on major decisions. In some cases, those decisions must also be approved by the shareholders. In other words, a system of checks and balances created with an eye toward accountability must be established.

For business owners accustomed to making decisions regarding the direction of the company on the fly, this structure can seem cumbersome, if not counterproductive. Owners and employees alike may bemoan such changes, looking with nostalgia upon the days when the business was "smaller and more personal."

By-Laws and Articles
A C-corporation must file articles of incorporation with the state secretary of state's office. It must also create and record a set of by-laws. Very often, these administrative requirements require the services of one or more lawyers which can prove costly.

C-corp status offers definite positives, but its administrative requirements can prove deleterious to the entrepreneurial spirit.

The Best Company Incorporation Services Compare Company Incorporation Services Compare Company Incorporation Service Reviews What are the best Company Incorporation Services Best Company Incorporation Service Reviews

Company Incorporation Service FAQ

Incorporation is the process used to legally create a company or corporate entity. This is usually done when a business wants greater protection and status than when under operation as a sole proprietorship.
When you incorporate, it separates your company's income and assets from your personal holdings - and from those of your investors and owners. In the event of a lawsuit against your business, your personal savings, property, vehicles, and other assets wouldn't be threatened.
Operating as either a corporation or an LLC offers significant legal protection and benefits. You'll want to incorporate, however, if you plan to do business internationally or go public.
Depending on how much help you need and which provider you select, incorporation service fees range from $49 to $899. That's in addition to any mandatory filing fees in your state.
Your paperwork can be completed and filed in one business day. Each state differs with respect to turnaround times once your application has been filed with the appropriate office.
Yes! Most company incorporation services make it hassle-free to submit all of the required documentation online, and they often file your application on your behalf. Some providers give you the documentation to fill out, but you'll have to file the paperwork on your own.
There are plenty of reputable services on the market, with thousands of satisfied customers who have used them successfully to incorporate their businesses. If you need extra reassurance that the provider you're considering is a reliable choice, be sure to check out their listing with the Better Business Bureau.
Most company incorporation services offer some form of satisfaction policy or error-free guarantee. However, if your paperwork has already been filed, any fees paid to the state probably won't be refunded.

Compare Company Incorporation Services

Select any 2 Company Incorporation Services to compare them head to head

best-company-incorporation-services
  • Incfile
  • Rocket Lawyer
  • Inc Authority
  • Corp Net
  • My Company Works
  • FileNow
  • Legal Zoom
  • My Corporation
  • Harbor Compliance
  • Biz Filings
  • Incorporate
  • Corporate Creations
  • Find Legal Forms
Incfile vs Rocket Lawyer Incfile vs Inc Authority Incfile vs Corp Net Incfile vs My Company Works Incfile vs FileNow Incfile vs Legal Zoom Incfile vs My Corporation Incfile vs Harbor Compliance Incfile vs Biz Filings Incfile vs Incorporate Incfile vs Corporate Creations Incfile vs Find Legal Forms Rocket Lawyer vs Inc Authority Rocket Lawyer vs Corp Net Rocket Lawyer vs My Company Works Rocket Lawyer vs FileNow Rocket Lawyer vs Legal Zoom Rocket Lawyer vs My Corporation Rocket Lawyer vs Harbor Compliance Rocket Lawyer vs Biz Filings Rocket Lawyer vs Incorporate Rocket Lawyer vs Corporate Creations Rocket Lawyer vs Find Legal Forms Inc Authority vs Corp Net Inc Authority vs My Company Works Inc Authority vs FileNow Inc Authority vs Legal Zoom Inc Authority vs My Corporation Inc Authority vs Harbor Compliance Inc Authority vs Biz Filings Inc Authority vs Incorporate Inc Authority vs Corporate Creations Inc Authority vs Find Legal Forms Corp Net vs My Company Works Corp Net vs FileNow Corp Net vs Legal Zoom Corp Net vs My Corporation Corp Net vs Harbor Compliance Corp Net vs Biz Filings Corp Net vs Incorporate Corp Net vs Corporate Creations Corp Net vs Find Legal Forms My Company Works vs FileNow My Company Works vs Legal Zoom My Company Works vs My Corporation My Company Works vs Harbor Compliance My Company Works vs Biz Filings My Company Works vs Incorporate My Company Works vs Corporate Creations My Company Works vs Find Legal Forms FileNow vs Legal Zoom FileNow vs My Corporation FileNow vs Harbor Compliance FileNow vs Biz Filings FileNow vs Incorporate FileNow vs Corporate Creations FileNow vs Find Legal Forms Legal Zoom vs My Corporation Legal Zoom vs Harbor Compliance Legal Zoom vs Biz Filings Legal Zoom vs Incorporate Legal Zoom vs Corporate Creations Legal Zoom vs Find Legal Forms My Corporation vs Harbor Compliance My Corporation vs Biz Filings My Corporation vs Incorporate My Corporation vs Corporate Creations My Corporation vs Find Legal Forms Harbor Compliance vs Biz Filings Harbor Compliance vs Incorporate Harbor Compliance vs Corporate Creations Harbor Compliance vs Find Legal Forms Biz Filings vs Incorporate Biz Filings vs Corporate Creations Biz Filings vs Find Legal Forms Incorporate vs Corporate Creations Incorporate vs Find Legal Forms Corporate Creations vs Find Legal Forms
Compare the Best Company Incorporation Services
- VS -
Review the Best Company Incorporation Services
See the Best Company Incorporation Service

Since you're interested in Company Incorporation Services, here are some other reviews you might find interesting.

The Best Reviews of Company Incorporation Services