The word corporation as a lot of people know it or rather think it is, is mainly used when people are referring to big business corporations.
People think corporation is a term that depicts a big company with high ranking managers and executives, and a multi-billion establishments.
But that is not always the case, because a privately owned company or small company can actually be a C-Corporation.
C-Corporations are just like other companies because you need to find a tax preparer, an accountant, and a lawyer that is an expert in business to draft the documentations, to make sure that all the companies transactions are legitimate in order to protect the company from any legal problems.
The Fundamentals of a C-Corporation
A C-Corporation is different from other types of companies in the sense that a C-Corporation can have a different management and owners.
In a C-Corporation, the shareholders of the company own the company partially because of the shares that was sold to them to raise capital for the company.
Though these shareholders are partial owners of the company, but for the effective management of the company, officers and board directors are appointed.
In a C-Corporation, the management of the corporation and the corporation itself is by law not dependent on the company’s shareholders, officers, owners, and the company executives, so they can’t be responsible, or individually held accountable in case of a lawsuit or any type of issues that may arise.
Though a C-Corporation is very similar to an LCC, it also has major benefits of having and effectively managing a corporation.
How to set up a C-Corporation
There are some basic requirements needed to set up C-Corporation:
Due to the corporate nature involved in setting up a corporation, it is imperative for the people that want to form the corporation to be aware of all it takes, even before the actual setting up process begins.
Because they might want to chose another state, due to the fact that the state chosen affects the fees that will be paid during filling, and the amount of tax that the company will be paying as long as the company exist and operate.
Some states encourage business owners by offering incentives to small businesses, though companies can be made to pay more taxes if they are not resident in the state they are incorporated.
The tax issues involved in a C-Corporation can be difficult for new owners due to the fact that this is a type of business that your income will be taxed at the corporate level before profits are shared among the owners of the business, thereby leading to double taxation because the owners will also be taxed on their personal income.
So before setting up a C-Corporation, it is very important to find a tax preparer and an accountant to help in the setting up process.
Major Benefits of a C-Corporation
There are some very good benefits of C-Corporation, and they are
Though it is not too easy filling all the documents needed, and managing the business as compared to an LLC, so it is imperative to find a tax preparer and an accountant to make the business run efficiently.
The Risk Involved in a C-Corporation.
It is a known fact that C-Corporations are run like a separate body that shields the shareholders of the company against individual liability due to the any action done by the company, but they have been cases where the court have been able to remove the cooperate cover and come against the assets of the company owners.
But this is totally dependent upon the state that the is incorporated and the business being run.
