Corporations If you are a C corporation or an S corporation then you may be liable for Use Form Separate Instructions Income tax , U. Related Topics Business Structures. S Corporations.
Publications About Publication , Corporations. Page Last Reviewed or Updated: May State laws require all corporations to maintain a registered address with the Secretary of State in each state where they do business.
The person or company located at that address, known as the Registered Agent, must remain available during all business hours. A Registered Agent receives and forwards important legal documents and state correspondence on behalf of the business. Most states require c corps to file annual reports and pay franchise taxes to maintain their good standing. Failure to file annual reports and pay franchise taxes can result in fines, notices, and the inability to conduct business.
State laws require c corps to hold annual meetings of shareholders and directors and record meeting minutes. Owners and directors of a c corp use corporate minutes to reflect changes in management and important corporate activities.
Additionally, almost all state, county, and local governments require c corps to complete business license, permit, and tax registration applications before beginning to operate. The company is owned by shareholders, who elect directors.
The directors set a vision for the corporation and are responsible for the management of the corporation. The officers and managers hired by the directors are responsible with carrying out the vision on a day-to-day basis. Since a c corp is its own legal identity separate from that of its owner , a c corp can own an interest in an LLC.
An s corp can own a c corp. However, a c corp cannot own an s corp. Much of this has to do with the structuring of a c corp vs an s corp. To learn more about what is an s corp and how it differs from a c corp, please visit the s corp page. Generally the owners of a corporation cannot be held liable for the debts and obligations of the corporation. However, if owners treat the corporation as an extension of themselves — sometimes referred to as "disregarding the corporation form" — such as, by commingling personal and corporate funds or making important decisions without holding board meetings or passing resolutions, then creditors can attempt to hold owners liable for the debts and obligations of the company — often called "piercing the corporate veil.
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Basic Information. Forming a C Corporation. What Is a C Corporation? How Is a C Corporation Formed? Chosing a C Corp Pros. Limited Liability. Exist Independently of Owners. Fluid Ownership. Enhanced Corporate Credibility. Different Tax Structure.
Double Taxation Investors. Extensive Legal Requirements. A C Corporation has Limited Liability Because a C Corp is a separate legal entity, the liabilities of the business are separate from the liabilities of the directors, investors and shareholders.
Briefly, they are:. Entity Type. Has to file a separate tax return. Can pass on their profits to shareholders as dividends. Is Limited to having a maximum of shareholders.
Profits and Taxes. Tax Rates. Stock Dividends. Legal Requirements. Stock Dividends from C Corporations A C Corporation may choose to distribute some of the profits of the company as dividends, which are distributed to shareholders.
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