“C-Corporations” are the business entity which traditionally comes to mind when we think about corporations. They must be registered (incorporated) with the designated state agency (typically Secretary of State’s Office) in the state you chose as your business’s headquarters/”home” (this can be your home state or another state offers tax, legal or financial advantages).

State laws regulate the incorporation process and each state sets its own corporate tax structure, filing fees and procedures for registering your corporation (incorporating) and filing an Annual Report (varies by state).

Naming your C-Corporation
The first step when you want to incorporate is selecting a business name which is “available” in your “home” state. This means choosing a name that has not been previously registered in the state and is not sufficiently similar to the name you’ve chosen to be pose potential legal conflicts. (The Secretary of State typically maintains a list of existing corporations and will not allow a new company to incorporate using an identical or “unfairly similar” name).

Your register your C-Corporation by filing Articles of Incorporation with the Secretary of State (in your “home” state) along with filing and license fees (fees vary by state). The Articles of Incorporation are signed by the person(s) who are incorporating the business and the Registered Agent hired by the corporation to act on its behalf. Some states allow you or your Registered Agent to reserve a corporate name if it is available before your Articles of Incorporation are filed.

C.-Corporations issue shares of stock to “shareholders” who own the company and elect its officers and directors. Their agreed-upon rights, duties and obligations are typically contained in a shareholders’ agreement.

Legal, Financial and Tax Liabilities
C-Corporations provide the most legal protection of all entities for business owners (shareholders). All income, expenses and taxes are the Corporation’s obligation, not its shareholders, officers or directors. The corporation is taxed by Federal (IRS) and state taxing authorities. It can deduct fringe benefits as business expenses.
Under the Tax Code, C- corporations pay taxes on corporate income. Shareholders pay income taxes on dividends which the corporation distributes to them, at their personal tax rate. Corporate officers can be subject to personal liability if the corporation fails to comply with tax laws (i.e. not withholding and/or paying taxes as legally required)

Personal liability of incorporators, directors and shareholders for corporate debts is limited to the amount each has been invested in the corporation. If the corporation fails to pay its debts and liabilities, its creditors can only reach corporate assets, they cannot ask its shareholders, officers or directors to pay its debts.

Foreign Ownership
U.S. citizenship is not required to establish a C-corporation in any state. Thus foreign nationals can incorporate in any state. They don’t even have to be present in the U.S. as long as they have hired a Registered Agent residing in that state to perform the process of incorporation for them.

Registered Agents
In order to incorporate you must designate/hire a Registered Agent (RA) to receive notices from the state and lawsuits. The RA must be a resident of the state in which you are incorporating.