FAQs
Incorporate a C Corporation Frequently Asked Questions - C Corp Info
Q. What is a C corporation?
A. The standard corporation, also called a C corporation, is the most common corporate structure. To create a C corporation the proper formation documents, typically called the articles of incorporation or certificate of incorporation, must be filed with the appropriate state agency and the necessary state filings fees paid.
Top of page
Q. What paperwork is required to incorporate?
A. Articles of incorporation conforming to state law must be prepared and filed with the proper state authorities, and filing fees along with any applicable initial franchise taxes or other initial fees, must be paid.
If you incorporate through BizFilings, all you need to do is complete the online order form or place an order by phone and BizFilings prepares and files your articles of incorporation. Additionally, the price you pay includes all filing fees. It’s simple, just fill out the order form to get started.
Top of page
Q. Who can form a C corporation?
A. There are no restrictions as to who can form a C corporation. There are no age, residency or other legal requirements.
Top of page
Q. Do I need an attorney to incorporate?
A. No, an attorney is not a legal requirement to incorporate. You can prepare and file the articles of incorporation yourself; however, you should understand the requirements of your intended state of formation.
You can use BizFilings' service to incorporate and save money on attorney fees. However, if you are unsure if incorporation will benefit your business, consult an attorney or accountant.
Top of page
Q. What should I name my C corporation?
A. Choose the name of your C corporation carefully. It is very important that you portray the image you want for your new C corporation. Legally, the name you select must not be “deceptively similar” to any existing corporation or must be “distinguishable on the record” of your state. For example, if a corporation named Flower Corp. exists in your state, you probably would not be allowed to name your business Flour Inc. It is possible that the name you select will not be available; therefore BizFilings asks for a second choice on the incorporation order form.
Additionally, the name you choose must show your business is incorporated. Most states require that the corporate name be followed by a corporate ending such as "Corporation," "Incorporated," or an abbreviation such as "Inc." or "Corp." For more information regarding the requirements of each state, view the state specific facts.
Top of page
Q. What is double taxation?
A. Double taxation occurs when a C corporation's profits are taxed at both the entity and individual levels. Profits of the business are reported and taxed at the entity level first. Then, if the C corporation distributes any part of the remaining profits to the shareholders in the form of dividends, the shareholders must report the dividend as personal income and pay taxes on it at the individual level. To avoid double taxation, many business owners choose to make a special election with the IRS to become an S corporation.
Top of page
Q. What are authorized shares of stock?
A. C corporations must indicate the number of shares of stock they wish to authorize (and a par value associated with each share) in the articles of incorporation. The number of authorized shares is the total number of shares available for a C corporation to issue to shareholders; however the C corporation does not need to issue the total number of authorized shares. Some C corporations opt to hold a certain number of un-issued shares in order to add additional owners at a later date or to increase the ownership percentage for a current shareholder. An issued share of stock shows ownership in the C corporation and each shareholder obtains a certificate representing the ownership value of the C corporation.
C corporations can alter the number of authorized shares or the par value of shares at anytime in the life of the C corporation by filing an share amendment with the state.
Top of page
Q. What is a share’s par value?
A. The par value of a share is its minimum stated value. Par value typically does not correlate to the actual value of a share. Common par values are $0.01, $1.00 or no par. The actual value of a share is its fair market value, or what someone is willing to pay for a share of stock. For public companies, actual value is determined by the price investors are willing to pay for each share on the national exchange. For private companies, the actual value of a share is typically determined by the overall value of the C corporation or the book value.
Top of page
Q. What is the organizational structure of a C corporation?
A. The organizational structure of a C corporation relies on three basic groups: shareholders, directors and officers.
A C corporation is owned by shareholders; however, they do not directly manage the C corporation. Instead, they influence corporate decisions through indirect methods such as electing and removing directors, approving or disapproving amendments to the articles of incorporation and voting on major corporate issues.
The directors, who comprise the “board of directors,” are responsible for managing the affairs of the C corporation. Usually, directors make only the major business decisions. They also appoint and supervise the officers, who make the day-to-day business decisions of the C corporation.
Officers are responsible for the everyday management of the C corporation.
It is important to note that a shareholder may serve on the board of directors and as an officer. In fact, most states allow C corporations to have only one shareholder who also serves as the sole director and officer.
Top of page
Q. How many directors do I need to form a C corporation?
A. Only one director is required in most states although you are allowed to have more. Some states use the number of shareholders in the C corporation to determine the minimum number of directors. For example, if the number of shareholders is three, then the C corporation must have three directors. If the C corporation has less than three shareholders, then the number of directors may equal the number of shareholders. For more information regarding the requirements of each state, view the state specific facts.
Top of page
Q. Where should I incorporate my business?
A. Once a business owner has decided to incorporate a business, the next step is to decide where to incorporate. It is not a requirement to form the company in the state where it will be physically located. It can be incorporated in any state or Washington D.C. However, there are factors an owner should consider when evaluating which state is best for his/her business. For small businesses, two factors are typically considered when deciding where to form a C corporation. The first factor is the cost of forming in the home state versus the cost of forming in another state. The second factor pertains to taxation and corporate laws governing the states under consideration.
If the C corporation is a closely-held corporation, meaning it has one or few shareholders, and does business primarily within a single state, incorporation within the home state is often preferable. The cost of local incorporation will usually be less than incorporating in another state and qualifying to do business as a foreign corporation in the home state.
A foreign corporation that qualifies to do business in another state is subject to taxes and annual report fees from both the state of incorporation and the qualifying state. Another disadvantage of incorporating outside of your home state is the possibility of having to defend a lawsuit in another state.
For advice regarding which state is optimal for your particular business situation, consult an attorney or an accountant.
During the life of your business, if you find that your company needs to foreign qualify to transact business in another state, BizFilings can assist with this process.
Top of page
Q. What is a publication requirement?
A. A few states require notice to be published in a newspaper that a C corporation has been formed. States with this requirement for C corporations include: Arizona, Georgia, Nebraska and Pennsylvania. When you place an order with BizFilings, you can elect to publish the notice in the appropriate newspaper yourself or pay an additional cost to have BizFilings complete the publication requirement on your behalf.
Top of page
Q. How do I get started with the incorporation process?
A. After making the decision concerning what entity structure is best for your business, articles of incorporation must be filed with the state government and initial fees must be paid. Ordering with BizFilings satisfies this step.
After your articles are filed, your C corporation must hold an organizational meeting where bylaws are adopted and the incorporation process is completed. Share certificates should be distributed to shareholders and these transactions should be recorded on the C corporation's stock ledger. All of this information should be kept in a corporate record book. BizFilings' Corporate Kit assists customers with this process.
Top of page
Q. What is Rush Filing service?
A. BizFilings' Rush Filing service allows clients in certain states to decrease their filing time frame to 24 to 48 hours.
Top of page
Q. Is Rush Filing available for every state?
A. No. BizFilings’ Rush Filing service is available in the jurisdictions listed in the chart below. The turnaround time listed adjacent to each state is the time it will take us to receive verification that your documents have been filed with the state, following the name approval or consent and is excluding weekends and holidays.
|
Turnaround Time |
|
Turnaround Time |
Alaska |
48hr |
Massachusetts |
24hr |
Arkansas |
24hr |
Michigan |
48hr |
California |
48hr |
Montana |
24hr |
Colorado |
24hr |
Nevada |
48hr |
Connecticut |
48hr |
New Jersey |
24hr |
Delaware |
24hr |
New York |
24hr |
Florida |
24hr |
North Carolina |
48hr |
Hawaii |
48hr |
Texas |
24hr |
Kansas |
24hr |
Virginia |
48hr |
Maryland |
48hr |
|
|
Top of page
Q. How soon will I receive my documents?
A. It is important to note that the 24 or 48 hour filing time is for the formation only. It typically takes longer for the states to produce the filed documents. Once BizFilings receives your documents from the state, we will ship them to you via FedEx Overnight delivery. This means you should have your documents in hand anywhere from just a few days to one week after filing.
Please note: some states require a client's signature on the formation documents when someone other than BizFilings is acting as registered agent. In these cases, the filing timeframe of 24 to 48 hours begins after we have received the signed documents and received any applicable prior approvals or consent.
Top of page
Q. Why should I include Rush Filing with my formation service?
A. Using BizFilings' Rush Filing service secures your name and filed date in as little as 24 hours. This service is particularly valuable when you need proof of formation to secure a contract or open a bank account.
Top of page
