How to Form a C-Corporation in the United States

A C-Corporation (C-Corp) is one of the most well-known and widely used business structures in the United States, especially for companies seeking to scale operations, attract investments, and secure limited liability protection. Unlike other entities, a C-Corp is separate from its owners, allowing it to raise capital through the issuance of shares, making it attractive to investors.

In this guide, we explain how to form a C-Corp in the U.S., its advantages, and the necessary steps to register your corporation correctly. Whether you're looking to expand your business or attract capital, a C-Corp could be the ideal option for you.

1. What Is a C-Corp and Why Choose This Structure?

A C-Corp (C-Corporation) is a legal entity completely separate from its owners (shareholders), meaning the personal liability of the owners is limited to their investment in the company. C-Corps can issue shares to raise capital, making them the preferred structure for companies planning to grow quickly or attract external investors.

Advantages of a C-Corp:

• Limited Liability Protection: Shareholders of a C-Corp are not personally responsible for the company’s debts, protecting their personal assets.
• Access to Capital: The ability to issue shares makes it easier for a C-Corp to attract investors and raise capital compared to other business structures.
• Flexible Structure: C-Corps can have an unlimited number of shareholders, which facilitates expansion and diversification of ownership.
• Credibility: Being a registered corporation offers more credibility with clients, suppliers, and partners, especially in regulated or competitive industries.
• Continuity: A C-Corp continues to exist even if shareholders change, providing long-term stability.

2. Steps to Form a C-Corp in the United States

Step 1: Choose a Name for Your Corporation

‍The first step to forming a C-Corp is selecting a business name. The name must be unique and comply with the laws of the state where you’ll register your corporation. It must include a designation such as "Corporation," "Incorporated," or their abbreviations ("Corp." or "Inc.").

It’s recommended to check the availability of the name on the Secretary of State's website in your chosen state to ensure it’s not already registered by another entity.

Step 2: File the Articles of Incorporation

‍To formalize your C-Corp, you must file the Articles of Incorporation with the Secretary of State in the state where you’re establishing the company. This document contains key information, such as:

• The name of the corporation.
• The purpose of the business.
• The number of shares the corporation is authorized to issue.
• The name and address of the registered agent who will receive legal documents on behalf of the company.

Step 3: Obtain an EIN (Employer Identification Number)

‍The EIN (Employer Identification Number) is issued by the IRS and is essential for opening a business bank account, hiring employees, and filing taxes. This number acts as the corporation’s tax identification number and can be easily obtained through the IRS website.

Step 4: Create Corporate Bylaws

Bylaws are the rules that will govern the operation of your C-Corp. This document outlines the rights and duties of shareholders, directors, and officers, and regulates how meetings, share issuances, and other operational aspects will be managed.

Although bylaws are not filed with the state, they are mandatory and essential for the proper functioning of the corporation.

Step 5: Appoint a Board of Directors

C-Corps must have a board of directors that oversees the company’s operations and makes key decisions. The shareholders of the C-Corp elect the board members, who are responsible for appointing officers (president, secretary, treasurer) to manage the company’s daily operations.

Step 6: Issue Shares

‍One of the primary advantages of a C-Corp is the ability to issue shares to raise capital. Shares represent ownership in the corporation and can be sold or transferred easily. It’s important to maintain detailed records of issued shares and shareholders to comply with legal requirements.

Step 7: Comply with Tax and Legal Obligations

‍Once the C-Corp is established, you must ensure compliance with tax obligations and file the annual reports required by the state. You’ll also need to conduct regular board and shareholder meetings and keep corporate records updated.

3. Tax Requirements for a C-Corp in the United States

A C-Corp is subject to federal, state, and local taxes, depending on the state where it operates. The main taxes that C-Corps face include:

Corporate Income Tax:

C-Corps must pay a federal corporate income tax on their profits. The current federal rate is 21%. Additionally, many states impose their own corporate income tax, which varies by state.

Double Taxation:

‍One of the drawbacks of C-Corps is double taxation. Corporate profits are taxed at the corporate level, and then, if distributed as dividends to shareholders, they are taxed again on the shareholders' personal tax returns.

Employment Taxes:

‍If your C-Corp has employees, you must withhold and pay payroll taxes, such as Social Security and Medicare taxes and Federal Unemployment Tax (FUTA). Each state also has its own rules regarding employment taxes.

Filing Tax Returns:

‍It’s mandatory to file corporate tax returns every year, regardless of whether the corporation generated income. C-Corps must also submit annual reports to the state to maintain their legal status.

4. Advantages of Forming a C-Corp in the U.S.

Our team can assist you in every aspect of forming your C-Corp, from choosing the right name and filing the necessary documents to ensuring compliance with tax obligations.

Our services include:

• Name Selection and Registration: We help you choose a business name that meets state regulations and handle the entire registration process, including the Articles of Incorporation.
• Obtaining an EIN and Tax Documents: We take care of obtaining your EIN so you can open bank accounts, hire employees, and meet tax obligations from the start.
• Drafting Corporate Bylaws: We assist in creating corporate bylaws, the key document governing how your C-Corp will be managed.
• Tax Compliance: We ensure that your corporation complies with all federal and state tax obligations, including payroll and corporate taxes.
• Ongoing Legal and Administrative Support: Our team provides continuous support to ensure your C-Corp maintains its legal status and complies with annual reporting requirements.

Conclusion

Forming a C-Corp in the United States is an excellent option for businesses looking to scale, attract investors, and establish a legal structure that offers liability protection and long-term stability.

If you’re ready to start your C-Corp and need guidance, contact us.