How to form a C-corporation for Digital Design

Introduction

If you’re a digital design company owner, you might be considering how to best structure your business. This can be a complex question, especially if you plan to take on investors or give employees your own shares in the future. The answer isn’t always straightforward: there are many ways for businesses to be structured and taxed, including sole proprietorships and partnerships, LLCs, S corporations, and C corporations. Each type of business structure has advantages and disadvantages depending on your goals as an entrepreneur. In this article, we’ll explore common structures such as sole proprietorship vs. partnership vs. corporation.

What is a C Corporation?

It is a type of business entity that is treated as a separate legal entity from its owners for tax purposes. It is the most common type of corporation, and it allows an investor to shield his or her personal assets from potential creditors. The main advantage of establishing this type of business structure is that it shields an owner’s personal assets from any claims made against their company. In other words, if your company fails and goes bankrupt, you will not be held personally liable for its debts or losses.

They are taxed separately from their owners at the corporate level but also at the individual level when any dividends are paid out to shareholders. This two-tier taxation system subjects C corporations to double taxation

The tax benefits of a C corporation

They are taxed on their profits, which are subject to double taxation. The corporation pays taxes on the profits and then shareholders pay taxes when they receive dividends from those profits. Capital gains taxes will be applied when the business sells assets for more than their original cost. Finally, if a C Corporation is sold or dissolved and its assets are distributed to shareholders (either as the liquidation or as the estate), then any gain on those assets is taxable again.

In addition to paying corporate income tax, it can pass along other costs in the form of additional taxes through shareholder dividends and capital gains distributions. So if you decide that you need all these benefits from a least-taxed entity type, there are ways of getting them without having your business operate as an S corporation or unincorporated entity—but it will cost you extra!

How to set up a C corporation?

Step 1 – create a corporate name

The first step is to check for availability of your proposed corporate name on the Internet. This can be done by searching for your proposed name in major search engines and ensuring that no other business entity or individual has already registered it. If you have trouble finding any information, it means you should go ahead with using that particular corporate name.

Don’t use abbreviations or acronyms as they may not appear correctly when written down or spoken during conversation with clients and colleagues – especially if they are foreign language speakers! For example, “Digital Design Co” would be better than “DIGITAC DESIGN CORPORATION”. Similarly, don’t use numbers in your company’s name unless they’re part of an established abbreviation (“3DS” instead of “3D Systems”). If you do choose a number based iteration like this please register as both DIGITAC DESIGN CORP., DIGITAC DESIGN INC., etc. so as not to confuse people who only know one version from another.* Do not include “corporation”, “incorporated”, “company” or similar words in your business’s name because these trigger government regulations under which all new businesses must comply even before they open their doors.

Step 2 – File Articles of Incorporation

After you register your business name and have your corporation papers in order, you must file articles of incorporation with the state. Articles of incorporation must include:

• The name of your corporation
• Your address
• A short statement describing what kind of business it is (for example, “it will be engaged in providing computer services to customers”)

Step 3 – Create bylaws

Bylaws are the rules of conduct for your company, and they should be created before you file your articles of incorporation with the secretary of state.

Bylaws should include:

• A statement of purpose or mission statement that describes the reason for forming the corporation and how it plans to achieve its goals
• A list of officers (the people who run the business on a day-to-day basis) including their names and titles, as well as their responsibilities within the company
• A description of any committees that may be formed within your business; for example, an executive committee or board of directors

Step 4 – Give out shares

Now that you’ve formed your company, it’s time to give away shares. You’ll want to do this because it will help with tax planning and give others an incentive to work hard for you.

First, determine how many shares of the corporation you’ll issue. Next comes determining what each share is worth—basically how much money will be invested into the company initially (and later). One final note about issuing stock: if your business has multiple owners who all want equity participation in it but don’t want to put up equal amounts of cash upfront (or at all), consider setting up a stock option plan so everyone has an incentive not only when profits come rolling in years down the road but also during times when things get tough as well.

Step 5 – Hold meetings and take minutes

You must hold an annual meeting of shareholders within one month after the end of each fiscal year. At this meeting, you can vote to dissolve your corporation or to continue it. You also need to approve any proposed amendments to the corporation’s articles or bylaws. The meeting must be held in Washington state if all shareholders reside in Washington State; otherwise, it can be held anywhere you want to hold it so long as you obtain written waivers from all shareholders agreeing to waive their right under Washington law for the meeting location chosen. If your corporation has more than 100 shareholders and is located outside of Washington State, then all shareholder votes must be cast at a special meeting called by mail ballot unless all shareholders agree otherwise in writing before voting begins.

Conclusion

C corporations are a great option for digital design companies. They give you the flexibility and protection to do what you want, when you want without worrying about getting sued. But they also come with their own limitations – namely that only shareholders can have limited liability but not employees or contractors. So if this is something that concerns you as an entrepreneur then consider using an LLC instead!