How to File for a C Corporation
Filing for a C corporation is one of the easiest business structures to set up. A C corporation is formed in the United States and is legally considered a separate entity from its owners. This means that it has legal rights and obligations that are different than those of its owners—a corporation can own property, enter into contracts, and sue or be sued in court.
Determine the Name of your Corporation
The first step in filing for a C corporation is to determine what you want to call it. If you are creating an LLC, limited partnership, or some other type of legal entity that is not a corporation, skip ahead to the next section.
To ensure that no one else has already taken the name you have chosen for your business and because the company's name will appear on all official documents and filings with state agencies (including tax forms), it's important that you choose something unique that does not violate any rules or regulations. There are also restrictions on how certain words should be used in forming a corporate name:
- The word "corporation," "incorporated," "company" or an abbreviation of one of these words cannot be included in any part of your company's name unless part of another word such as “acme” or “corp”
- A company cannot use its own full legal name (the same as what appears on its articles) as its trade name because doing so would be misleading.
Choose a Registered Agent
Choosing the right registered agent can be a critical part of your business success. If you select an agent that is not qualified and available, you risk fines and penalties from the state, which could result in your corporation being dissolved.
You’ll also want to make sure that the registered agent you choose is affordable and reputable. No matter what type of business structure you have, it’s important to find someone who will be there for you when needed.
File Articles of Incorporation
The process of filing articles of incorporation is different in each state. In some states, you will file with your secretary of state; in others, you will file with the office of the clerk. You should find out which agency to file with before starting the process and have all the information on hand when filing. It’s important to note that you may also have to pay a fee when filing. You should contact the agency in question and find out how much it will cost before proceeding.
Prepare Corporate By-laws
The next step is to prepare corporate by-laws. The by-laws are a set of rules that govern how the corporation operates. To be valid, by-laws must be signed by all directors and shareholders.
The state does not require a copy of these documents. However, if you want someone else to be able to see them or want to keep them in case of future litigation over your business (or as evidence at trial), you should keep copies on file at least until they are no longer needed for legal purposes.
Hold a Board of Directors Meeting
The board of directors is a group of people who make decisions for the corporation and are responsible for hiring and firing its CEO. The board should meet at least once a year to approve major corporate transactions, such as mergers or acquisitions.
Issue Stock Certificates to Shareholders
In order to issue stock certificates, you will need to draft a certificate of incorporation. This is essentially the legal document that establishes your corporation. It should include:
- The name and address of your company.
- The number of shares that were issued as well as their par value (the price per share).
- The name and address of each shareholder, along with how many shares they own or will be receiving upon incorporation.
- A statement confirming that all shareholders are eligible to own stock in this specific type of business entity.
The process of filing for a C Corporation can be long and complicated, but it’s well worth the effort. By forming a C Corporation, you will avoid paying certain taxes and enjoy limited liability protection for your business assets. This will help ensure that your personal finances are protected from any future lawsuits or claims against your corporation.
We hope that this guide has helped you to understand the process of creating a C corporation. It’s important to note that every state has different rules and regulations, so it’s best to consult a professional in your area for more information about how things work there.