Start a C-Corp with Inc Authority’s Business Formation Package
Setting up a Corporation has never been easier. Form a C-Corporation with Inc Authority’s Corporation formation package, it includes all the essentials you need to file and form your C-Corporation online.
- Business name check within your state
- Registered agent service so you’ll never miss a legal notice
- Free Business Bank Accounts + Credit Card
- Digital delivery and storage of your start-up documents
- Tax planning consultation to help you save more of your income
- Preparation and filing of your formation documents to your state
- S-election form 2553 preparation and filing with the IRS (optional)
- Expert staff support to answer questions via email and phone
- Business credit and funding analysis to discuss solutions to building your business
Inc Authority offers the most convenient, hassle-free, and simple solution to start a C-Corp.
What is a Corporation?
In the United States Corporations are the most common type of incorporated business structure and with good reason. Corporations, also known as C-Corps, offer infinite growth potential through the issue and sale of stocks, which in turn attracts some very wealthy investors. In addition, there is no limit to the number of shareholders a c-corporation can have.
IRS Definition of a Corporation: A corporation is a legal business entity established by a charter granting it certain legal powers, rights, privileges, and liabilities. A corporation can be established by a person or group of people with a charter from the state’s secretary of state. After a corporation is created, it becomes its own entity and generally has an indefinite lifespan.
Taxation and Liability of a Corporation
Unlike an LLC or an S-Corporation taxes, a C-Corp is taxed as its own entity and is subject to corporate income tax, at the below tax rate by the IRS (Internal Revenue Service):
Recent Tax Reform eliminated the numerous tax brackets for Corporations and instead imposed a fixed 21% tax rate on C-corp regardless of income.
Here are some other characteristics of C-Corporations with respect to taxation and liability protection:
- Corporations are subject to double taxation: the C-Corp will pay corporate tax while each shareholder will pay personal income tax on their earnings.
- But, owners of a C-Corp can avoid double taxation by paying themselves a salary or year-end bonus that will leave the C-Corp’s earnings at $0.
- If you take a salary from the C-corp, without bringing the taxable business income to $0, then both the Corporation and the individual will be taxed,
- In such cases, personal income taxes will be lower due to a lower tax bracke This is known as Income Splitting.
- Leaving $250,000 or less in the Corporation’s bank account as earnings is considered reasonable amount for regular business needs.
- However, if you leave more than $250,000, the amount over $250,000 is subject to an Accumulated Earnings Tax of 20%.
- Since C-Corps are not pass-through entities, profits and losses are not passed through to the shareholders’ personal tax returns, like they are in an S-Corp.
- If a C-corp incurs a loss, it can be used to offset income taxes to the corporation that it paid in the last 2 years, or will pay in up to 20 years in the future.
- Form 1120: Form 1120 is the form used for a Corporation’s annual tax return.
Now that you understand the characteristics of a C-Corp, it’s time to learn how to start a C-Corp quickly and easily.
Inc Authority Partners with the Best
How to Start a C-Corp in 10 Easy Steps
Here is a step-by-step guide on how to start a C-Corp in the US and hit the ground running with your new business.
Choose a Unique Business Name
Before you even learn how to start a C-Corp, you need to find a unique and relevant business name for your new company.
Here are some characteristics of a good business name. It should be:
- Unique and not used by any other business
- Short, memorable, and easy to spell
- Relevant to your business or industry
- In adherence with the state naming laws
You can register your business name or have it reserved before you start a C-Corp to ensure that no other business can take it.
Appoint a Board of Directors and a RA
Before you start a C-Corp, you must have a board of directors who will be responsible for managing your business.
The directors will be responsible for:
- Creating business policies
- Hiring the top executives
- Setting a vision and mission
- Managing business affairs
At this stage in this guide on how to start a C-Corp, you should also appoint a registered agent (RA) for your business.
File the Articles of Incorporation
The next step in this guide on how to start a C-Corp is filing the articles of incorporation with the secretary of state.
Articles of incorporation typically include:
- Name and address of your C-Corp
- Contact details of the registered agent
- Corporate goals or purpose of formation
- Type and number of shares to be issued
Once you file your certificate of formation or articles of incorporation your business will be registered as a separate legal entity with the Corporation status.
Create Your Corporate Bylaws
Every Corporation needs corporate bylaws to set governance rules and how the company will be managed.
Corporate bylaws should include:
- Number and type of directors
- Directors’ roles and voting rights
- How to elect or remove directors
- How to call & hold board meetings
Basically, your corporate bylaws state the rules of how to run your Corporation and how to resolve conflict if it arises.
Hold an Initial Board Meeting
When you start a C-Corp, you need to hold an initial board meeting that to set the direction of the business and make some decisions.
The board of directors convenes to:
- Adopt corporate bylaws
- Appoint corporate officers
- Authorize the issue of stock
- Take other strategic decisions
This is the stage where you can make the decision to convert your C-Corp to an S-Corp, if you so desire.
Issue Stock to Raise Capital
Issuing stocks is the main way a C-Corp raises capital to run and grow the business. You can start doing that at this stage.
It is important to keep a record of:
- How many shares were bought
- Who bought those shares
- How much a share costs
- When were the shares purchased
Once you’ve issued shares and raised enough capital, you will have the fund required to start and run your new business.
Get the Required Permits
Every business needs to obtain certain licenses and permits based on its state of formation and type of business.
Some examples of licenses and permits are:
- General business license
- Health & safety permits
- Sales tax license
- Zoning or sign permits
You may need federal, state, or even local permits to run your business, so make sure you get these before you start a C-Corp.
Obtain Your Tax ID Numbers
You will need a federal or state tax ID number, also called an employee identification number, to hire employees and pay taxes.
Every business needs an EIN to:
- Help the government keep track of taxes
- Hire employees and pay their salaries
- Open a business bank account
- Pay taxes and avoid tax penalties
It is not only necessary for a C-Corp to have a tax ID number, but also important. So make sure you obtain your EIN on time.
Open a Business Bank Account
As a business owner, you must keep your personal and business accounts separate, to make things easier in the long run.
Opening a business bank account would require:
- An employer identification number
- Your articles of incorporation
- Name & address of the business
- Personal information of major shareholders
A separate business account is a must if you want to protect your personal assets from your business’s financial liabilities.
Set Up Accounting & Bookkeeping
The last step in this guide on how to start a C-Corp involves setting up your accounting and bookkeeping operations.
Setting these up will help you:
- Keep track of your income & expenses
- Organize your financial transactions data
- Prepare and file tax returns on time
- Legitimize your tax returns and filings
That’s the end to our guide on how to start a C-Corp. If you need assistance in expediting the process and making it simpler, start a C-Corp for free with Inc Authority.
Why Should You Start a C-Corp with Inc Authority?
Here are some reasons why you should use the free C-Corp formation service offered by Inc Authority.
Inc Authority makes starting a C-Corp seem like a breeze and does it for free. You just need to pay the state filing fee and fill out an online application.
Benefits of Forming a C-Corporation
Now that you have learned how to start a C-Corp, you should also assess if it’s the right choice for you. Learning the benefits and drawbacks of starting a C-Corp will help.
Here are the benefits of starting a C-Corp.
Liability Protection
The biggest benefit of starting a C-Corp is that it offers personal liability protection. This means that your personal assets will not be seized to pay off business debts and cover its financial liabilities.
Separate Legal Entity
A C-Corp is a legal entity, separate from its owners. It can sue or be sued, raise capital, and open a bank account. It’s also easy to change the ownership structure through a simple share transfer.
Ease of Raising Capital
It is easier to raise capital for a C-Corp than for any other entity. Lenders prefer giving funds to Corporations as there’s less risk involved. Issuing shares to raise funds is also an option.
Tax Breaks
A Corporation can enjoy numerous tax breaks by writing off business expenses. For example, Corporations can get tax breaks for health insurance premiums and retirement plans.
A C-Corp is one of the best business structures for companies that are keen on business expansion as it’s easier to raise capital for a Corporation.
Drawbacks of Forming a C-Corporation
White a Corporation offers many benefits, it also has its own set of disadvantages. You must understand these before you decide to start a C-Corp.
Here are the major drawbacks of starting a C-Corp.
Double Taxation
The biggest challenge you’ll face when you start a C-Corp is paying both corporate taxes and taxes on your personal income. This double taxation is the major drawback of a C-Corp.
Expensive to Form & Run
Of all the business structures, a C-Corp is the most expensive to form and run. Both the initial business formation fee and ongoing fees are higher for a C-Corp than an LLC or a Sole Proprietorship.
Rigid Protocols
A C-Corp has strict requirements like appointing a board of directors, having regular meetings, following corporate bylaws, and detailed financial reporting, making it difficult to run a C-Corp.
Complex Formation Process
It is also more difficult to start a C-Corp than any other entity and the process is complex and time-consuming. The paperwork involved in the process is considerable and tedious.
It is up to you to decide whether the benefits outweigh the drawbacks. Inc Authority can, however, make it easier and cheaper for you to start a C-Corp.
Differences Between a C-Corp and an S-Corp
Many small business owners prefer an S-Corp over a C-Corp just to avoid double taxation. An S-Corp is taxed like a pass-through entity where the owners pay taxes on their personal income.
Here are the key differences between an S-Corp and a C-Corp.
| C-Corp | S-Corp | |
| Taxation | Double taxation | Pass-through taxation |
| No. of Owners | Any | <100 shareholders |
| Type of Owners | Businesses & individuals | Only individuals |
| Types of Stocks | Multiple classes | One class of stock |
| Tax Breaks for Benefits | Yes | No |
Consider these differences before you decide whether you want to start a C-Corp or an S-Corporation. In either case, Inc Authority can make the process easier for you.
What Customers Say About Inc Authority
Check out these reviews to see how much Inc Authority’s customers love their service.
First-time business owner
What made the experience great, was Oliver Muro my start-up coach made me feel comfortable about starting my business. After listening to him explain things, I said I didn’t understand some stuff, so he took time and went over them with me. He showed me this company looks out for its customers in every way possible!
– James Thomas
Professional service
Peter Thompson offered very professional support. Gave me good advice about business setup and steps that will happen after payment. He was patient with me because I have payment issues and actually gave me a huge discount to get me started. I would recommend Inc authority to my friends or anyone who wants to start up a biz.
– Charles Gomez
Starting a business
If anyone is looking to start a business I definitely recommend Chris Hernandez. This is actually my first business and he made everything flow so smooth. He was very professional, calm, didn’t try to rush through the steps, and had an answer to any questions I had. So thank you once again for help me get things started
– Chelsea Eatman
Want to get a similar experience when you start a C-Corp?
Frequently Asked Questions
Here is the step-by-step guide on how to start a C-Corp:
- Choose a unique business name
- Appoint a board of directors and a RA
- File the articles of incorporation
- Create the corporate bylaws
- Hold an initial board meeting
- Issue stock to raise capital
- Get business licenses & permits
- Obtain your tax ID numbers
- Open a business bank account
- Set up accounting & bookkeeping
Even if you know how to start a C-Corp, the process can be tedious and time-consuming. A better alternative is to use Inc Authority’s free C-Corp formation service that only requires you to pay the filing fees.
Here are the benefits you’ll get if you start a C-Corp:
- Personal liability protection
- An easy way to raise capital
- Business perpetuity and a separate legal entity
- Tax breaks on benefits like retirement plans
Any business that anticipates business expansion in the near future and a need for capital should start a C-Corp as it makes raising capital easy.
Now, let’s check out some of its disadvantages as well. Here they are:
- Double taxation: both the C-Corp and its shareholders will be taxed
- Rigid protocols: C-Corps need to meet many compliance requirements
- Expensive: the formation and running costs are high for C-Corps
- Complex: it is time-taking and difficult to start a C-Corp
If you want to start a local small business, then you’re probably better off with a Limited Liability Company or a Sole Proprietorship. Corporations are great for large businesses that want to expand geographically and need a lot of capital.
C-Corps are charged at a flat rate of 21% for corporate taxes irrespective of their tax bracket or annual profit. Many business owners try to avoid paying steep corporate taxes by paying themselves salaries and making the corporate taxable income zero. However, in most cases, C-Corps would have to pay double taxes.
Also, please note that if your C-Corp’s accumulated earnings cross $250K, you’ll have to an additional tax of 20% on those. So, it’s smarter to keep less than $250K in your Corporation’s bank account for day-to-day business operations.
Here are some tax deductions that a C-Corp can make:
- Employee salaries or wages
- Health benefits for employees
- Retirement plans expenses
- Training and development expenses
- Disability benefits for employees
- Educational expenses for employees
Overall, a C-Corp can get many tax breaks that can reduce the amount of taxes they need to pay. However, for big companies, avoiding double taxation is quite difficult.
Even if you know how to start a C-Corp, it is no easy task to start one. It is a lengthy and tedious process that requires complex paperwork and weeks of processing time.
Here’s what you get with Inc Authority’s free business formation package:
- Free C-Corp formation by paying only the state filing free
- Free registered agent service for one year
- Business name search and check
- Tax planning consultation service
- Business credit and funding assessment
- 7-day INC CARE customer support
With Inc Authority, all you need to do is fill out an online application and they’ll take care of the rest and even expedite the process. The best part is that it is 100% free and you also get a free registered agent service for one year.
Start a C-Corp for Free with Inc Authority
If you want to start a C-Corp for free and still want an amazing and hassle-free experience, Inc Authority is your best option. Start a C-Corp quickly and easily simply by filling out an online application. It’s that simple!