How to Form a Corporation in 11 StepsChoose a Business Name.Register a DBA.Appoint Directors.File Your Articles of Incorporation.Write Your Corporate Bylaws.Draft a Shareholder Agreement.Hold Initial Board of Directors Meeting.Issue Stock.More items...•
The first step in forming a C corporation is to choose and register an unregistered business name. The registrant will file the articles of incorporation with the Secretary of State according to the laws of that state. C corporations offer stock to shareholders, who, upon purchase, become owners of the corporation.
The major steps in formation of a company are as follows: Promotion stage. Registration stage. Incorporation stage.
File your Articles of Incorporation. Draft corporate bylaws. Draft a shareholders' agreement. Hold an initial board of directors meeting.
The most fundamental requirement for a C corporation is the creation and filing of articles of incorporation, according to the ExpertLaw website. Articles of incorporation establish the structure, mode of operation and principle officers of the enterprise.
It qualifies to do business in California by filing a “Statement and Designation by Foreign Corporation” and an original certificate of good standing from the state or country in which it was incorporated with the Secretary of State.
Steps of the Company Incorporation ProcessStep 1: Reservation of Business Name with the Securities and Exchange Commission (SEC)Step 2: Submission of Documents to SEC.Step 3: Registration with Local Government Units (LGUs) of the location where you want to establish your business.More items...
Public corporations are formed by government entities for a government or political purpose. Local governments form corporations for functions such as water, sewage, school, parks, etc., which are some times referred to as municipal corporations. Private corporations are formed to carry on private owned businesses.
The C corporation is the standard (or default) corporation under IRS rules. The S corporation is a corporation that has elected a special tax status with the IRS and therefore has some tax advantages. Both business structures get their names from the parts of the Internal Revenue Code that they are taxed under.
A C corp is a business structure in which owners (or shareholders) are taxed separately from the entity. Shareholders are owners of the corporation, each having a fractional interest in the whole. A shareholder could own a single share of the company, or millions of shares. C corps raise funding through the sale of these shares.
Forming a C corp is a complex process that likely will require consulting with a tax professional and a lawyer. At a high level, the steps for forming a C corp are as follows:
Running your small business as a C corp will be more complex than doing so as an LLC, for example. There are substantially more rules and regulations to follow. But the complexity is a necessity for businesses with more than 100 shareholders, or those that plan to seek investment from international sources or other corporations.
Choosing to form as an C corp can offer structural advantages not available to S corps and LLCs: freely transferable interests, a sky’s-the-limit funding apparatus, and an undeniable sheen of legitimacy, which can attract investors.
A business owner may want to convert their LLC into a C corp if they seek outside investment or want to issue shares of their company. There are two main ways to convert an LLC into a C corp—statutory conversion and statutory merger. The method taken will depend on state laws where an LLC is registered.
The main difference between a C corp and S corp lies in tax treatment. A C corp pays taxes on all corporate income, and shareholders pay personal taxes on any income they receive as dividends. S corps have pass-through taxation—shareholders report business income and losses on their personal tax return, but the company does not pay corporate tax.
Forming and running your small business like major US corporations can, at first, seem like a daunting undertaking, with tangled corporate regulations, checklists, and deadlines.