How to Register a C Corporation
The corporate structure is one of the most important decisions you'll make as an entrepreneur. There are many types of businesses to choose from, but if you have a high-growth vision for your company, you'll likely want to consider registering as a C corporation. This type of business has been around since the 1800s and was developed by the U.S. government to protect investors from personal liability in cases where their investments fail or become damaged due to circumstances beyond their control (such as natural disasters).
Choose a Name
You must choose a name for your corporation that is not already in use. This means you can't just take any old word and slap "corporation" at the end of it. The name must also have nothing to do with government agencies, like the FBI or CIA.
Also, make sure your business name doesn't have any negative connotations or sound like a government agency. Your choice of business name should be unique and creative so that it stands out from competitors' names but still reflects what type of company you want to be when doing business with customers or investors.
File a Certification of Incorporation
In most cases, you'll have to file a certification of incorporation with the state's secretary of state office. The cost and fees vary widely by state; some states have no filing fee at all, while others charge several hundred dollars for each corporate entity. In general, it's best to register your corporation as soon as possible after making this decision so that you don't miss any important deadlines or incur late fees (which can be very high).
Draft and Adopt Bylaws
The bylaws of a corporation are a set of rules that govern the operation of the corporation. A corporation should have its own bylaws that are adopted at the time of incorporation or at a later date. The bylaws must be approved by the board of directors and filed with state officials.
Organize a Board of Directors
The board of directors is the highest-ranking body in your corporation. It's made up of people who have a lot of experience in running companies, and they're responsible for making major decisions about where the company goes.
You need at least three directors: one president, one secretary, and one treasurer to run things. You can also add additional people as vice presidents or members if you want them to have more influence on what goes on with the company.
Choosing your board members is an important decision because they will be running your business and representing it in front of other businesses or clients. You will also want them to know how C corporations work before they join your team.
Issue Shares of Stock
You can issue shares of stock to your shareholders. The number of shares you issue depends on how much money you want to raise from investors and how many of the company's profits they will be entitled to share. For example, if you sell 100,000 shares at $1 apiece and get a total investment of $100,000 in your business, each shareholder will have a 1% stake in the company (even though their investment was only one dollar).
When selling shares, it's important to keep track of who owns what so that everyone knows where they stand financially when it comes time for profit sharing or tax deductions. To do this effectively, use a share registry software solution like ShareRegistry™. This allows shareholders to securely manage their information online while giving them access from anywhere in real-time.*
Write an Annual Report
An annual report is a document that provides information about your corporation for the year.
It should include:
- The name of your company, its address, and the names and addresses of directors.
- If you're an S-corp, include information about its stockholders (including their names).
- A list of all owners of more than 25% of the company's voting stock. This means that if someone owns less than 25% but wants to vote on matters affecting their shareholdings, they also need to be listed as part owners.
C Corporations offer more flexibility than S-corps and provide tax advantages over sole proprietorships. However, they're more expensive to set up and maintain because they require annual filings with the state in which they operate.
Once you have a C corporation, you’re ready to start filing federal and state taxes. You’ll need to file Form 1120 and any applicable state forms by March 15th of every year. This will be your corporation’s first tax filing, so you can expect a lot of paperwork and fees. However, after that initial year, you'll only have to file once per quarter (Form 1120). If you have any questions about starting a small business or need help with some accounting basics, contact us below!