What are the Requirements and Process For Filing for C Corporation
Introduction
Whether you’re starting a new business, or transferring an existing one, you need to make sure that your company is structured appropriately. There are several different types of business entities from which to choose. Each type provides specific benefits and limitations on how your company can be organized and operated.
This post will explain what a C corporation is, the requirements for filing for this type of entity and how the process works so that you can decide if it’s right for your business.
The Most Formal Type of Business Entity
A C corporation is the most formal type of business entity. A C corporation is a legal entity that is separate from its owners, meaning that it has its own rights and obligations. The owners of a corporation are called shareholders and can be individuals or groups of people who invest in the company and receive some sort of compensation in return for their investment.
In order to file as a C corporation, you will need to:
Choose a Company Name
The first step to filing your business is choosing a name for it. There are a few things to keep in mind when you are deciding on what to name your corporation:
- Choose a company name that is not already in use by another company or organization, as this can cause confusion and legal issues later on.
- Make sure that the name of your corporation is easy to spell and pronounce. If people can’t figure out how to say or spell your company’s name, there could be problems when customers are trying to find you online or elsewhere.
- Avoid offensive or confusing names for your corporation; this will help avoid any potential lawsuits later on if someone feels offended by their association with your business due to its name (e.g., if someone else has an existing trademark).
- Keep each word within the title no more than 10 characters long; while longer names may fit into spaces provided by state guidelines, they may be harder for people to remember and easier for competitors’ brands/logos/trademarks—which means they could also result in confusion among customers who might accidentally choose one over another based solely upon appearance rather than content.
Prepare Articles of Incorporation
The first step to filing for C Corporation status is preparing the articles of incorporation. These are the legal document that establishes your corporation, and they should contain the name of your corporation, the type of business it will conduct, and the location of its principal place of business (if you don’t have one yet). You can get a template online by searching for “articles of incorporation” on Google.
Once you’ve created a draft version of your articles, print out two copies: one for yourself (as an original) and another as a copy. Make sure all parties listed on the Articles sign both documents before sending either one to state regulators in order to finalize registration requirements.
File With the Secretary of State
The secretary of state’s website will have a list of all the documents you need to file. The most important ones are your articles of incorporation, bylaws and stock certificates. Articles of incorporation are basically the company’s birth certificate and should include:
- A corporate name that is not misleading and cannot be confused with another corporation or business entity.
- The type of organization (corporation, limited liability company, professional corporation, etc.).
- The names and addresses of each incorporator.
- A statement that each incorporator is acting in good faith and has no knowledge that any other incorporator lacks authority to execute the document on behalf of their respective corporations or businesses.
Appoint a Board of Directors
The board of directors is responsible for managing the company. They have a number of duties, including:
- Hiring and firing the CEO
- Establishing company policy
- Making major business decisions
Create Corporate Bylaws
- Create corporate bylaws. The bylaws are the rules of your company, and they will lay out how you operate in terms of management and ownership. It’s important to have good corporate bylaws because they set the ground rules for your business. Be sure to consult with a lawyer when creating or updating your bylaws because mistakes can be costly if you’re sued later on. You can also go through this process with a lawyer if you don’t want to do it yourself.
Hold an Organizational Meeting
Once you have filed your Articles of Incorporation, you are ready to hold an Organizational Meeting. This is a special meeting of the board of directors and shareholders, where they will elect the officers of the company.
The following people should be present at this meeting:
- All members of the Board of Directors (President, Vice President, Secretary and Treasurer). The number of directors should equal 1/3 or more than 1/2 votes available in case there are multiple classes of shares.
- If any shareholder(s) own less than 5% stock but more than 1% then they must also attend this meeting to appoint their representative as “non-voting member” on behalf of them (only if requested by non-voting shareholder). This person can only vote when there is a tie between voting members during voting process at general body meetings (GBMs).
Issue Stock Certificates
Stock certificates are the paper that represents your company’s issued shares. They’re not a necessity, but they can be useful in terms of managing risk and making sure that no one is getting an unfair advantage.
To issue stock certificates, simply take a piece of paper or cardstock and write down the name of your company as well as its trading symbol (if you have one). Then, create columns for each share type: common stock and preferred stock if applicable. Finally, fill out each row with information about the number of shares being issued with this particular certificate.
Conclusion
While it can be a bit overwhelming to think about the steps involved in filing for a C corporation, the best thing you can do is follow our guide and use it as a checklist. The more organized you are, the easier this process will be. If there’s anything we missed that you need help with or have questions about feel free to reach out!
