How to form a C-corporation for Software Development

Introduction

C-corporation is a business entity that is taxed separately from its owners. It has to pay corporate tax, but shareholders do not pay personal income tax on their share of the profits. C corporation can be an S corporation if it has 100 shareholders or fewer and those shareholders are not themselves other corporations.

C corporation can take on any form — for example, sole proprietorship, partnership, or limited liability company (LLC) — as long as it meets all requirements for that particular form of business organization. However, you have to choose what type of business organization you want when you first file articles of incorporation with your state government agency: either a sole proprietorship or a limited liability company (LLC). You cannot change from one type to another later on in your business’s life cycle.

In this article, we will discuss how to form a c-corporation for software development with examples!

What is a C-corporation?

A corporation is a business structure that separates the owners of a company from the business itself. This means that if you decide to start an LLC or S-corporation, you’re considered to be running the company as well as being an owner. In other words, there is no clear separation between your personal finances and those of your company.

A C-corporation—or what’s known more colloquially as “C corporation,” “C corporation,” or sometimes just “corporation”—is different in this regard: it allows for such separation because its owners are taxed on their share of profits when they file personal tax returns, not their share of ownership like with an LLC or S-corporation.

Why should you consider a C-corporation for your software business?

A C-corporation is a business entity that has the following characteristics:

• It’s an independent legal entity with its own tax identification number and liability protection.
• It can raise capital from investors, who will get shares in return for their investment.
• You are taxed on your company’s net income, which means that you pay taxes only on what’s left over after deducting all expenses.

How do you form a C-corporation?

• You will need a business bank account, which can be opened at any regular bank or credit union. The best way to open a business account is with a business checking and savings account combined in one. You may also want to set up an online bill payment system to make paying bills easier.
• You will file Articles of Incorporation with the secretary of state in the state where you are incorporated. There are several types of articles that you can use, depending on what type of corporation you want to form.
• Filing fees vary by state but typically cost around $100-$200 per filing; however, it could be more if additional documents or filings are required or if there are other costs associated with forming your company (such as hiring an attorney). This figure includes all filing fees except those related specifically towards registering as an LLC instead of incorporating as a C Corp–these additional fees would apply only when opting for this particular type of legal structure over incorporation into the existing corporate structure offered.

The pros and cons of forming a C-corporation for software development

The ability to issue stock options is one of the big benefits that come with forming a corporation, but you should be aware that it also comes with some downsides (such as paying taxes on your personal income).

If you’re considering starting your own company or joining another company in its quest for success, knowing about these pros and cons will help guide future decision-making.

A C-corporation is a good choice for companies in the software industry because the founders can take dividends from after-tax money

It’s important to note that C-corporations are not the best choice for every business. For example, if you’re a one-person developer or an individual contractor, it might be difficult to justify the added expense and complexity of forming a corporation.

On the other hand, if your revenue is significant enough and you foresee hiring additional employees in the future (or think it’s likely), then this option becomes more attractive.

Conclusion

In this article, we’ve discussed the advantages of forming a C-corporation for software development. We hope that you now have a better understanding of how to form this type of entity and how it might benefit your business. If you have additional questions about forming a C-corporation or other types of corporations, please contact us today!