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Related Articles

What are the Main Differences between an LLC and an S-Corp?

What Is a C-Corporation?

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Which Type of Company Incorporation is Right for You?

 

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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.

Meeting Preview: Woodlands board to tackle incorporation issues at Thursday meeting

The newly re-elected quartet of incumbents on The Woodlands Township Board of Directors were sworn in for their new two-year terms on Wednesday night, Nov. 28, by Precinct 3 Justice of the Peace Edie ...

Published:  Wed, 20 Mar 2019 14:25:00 GMT



Images Associated with the 1799 Town Incorporation Celebration

Wood Tavern (site of the Town Incorporation Celebration , March 18, 1799) .. razed in 1959. (J.E. Fogelberg Collection ) Wood Tavern (site of the Town Incorporation Celebration , March 18, 1799) .

Published:  Tue, 19 Mar 2019 15:02:00 GMT



Chair: Town's incorporation effort could hinge on agreement with city

BELOIT - Incorporation may not be in the Town of Beloit's best interests if the town can strike a deal on key issues with the City of Beloit, town chair Diane Greenlee said. "I've always been for ...

Published:  Fri, 22 Mar 2019 07:56:00 GMT



James Island incorporation bill has support and critics

CHARLESTON, SC (WCSC) - An old argument is back on the table in the South Carolina State House. Representative Peter McCoy's HB 3661 would allow unincorporated areas of James Island to rejoin the town ...

Published:  Wed, 20 Mar 2019 09:50:00 GMT



Fight over Chatham Islands incorporation continues, despite Skidaway 'no' vote

WHITEMARSH ISLAND, Ga. (WSAV) - The fight to make Skidaway Island its own city is over, but now legislators are shifting their focus to an incorporation movement on the Chatham County Islands, which ...

Published:  Fri, 22 Mar 2019 16:09:00 GMT



Navarre incorporation effort hits roadblock; county wants petition drive before considering referendum

Navarre incorporation effort hits roadblock; county wants petition drive before considering referendum Santa Rosa County leaders want more information before voting to approve or deny a referendum to ...

Published:  Mon, 11 Mar 2019 10:26:00 GMT



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