Choosing the type of business entity you want to establish is one of the most important decisions you will make when forming your new business. Forming a C corporation is a popular choice, and it is important to complete all the necessary steps to form your business. A skilled C corporation lawyer in NYC can help you navigate this process effectively.
Working with a knowledgeable business formation attorney can help you ensure all forms and papers are filed correctly so you can raise the capital you need. A knowledgeable New York City C corporation formation lawyer can help guide you through forming your C corporation.
A C corporation is a type of business that establishes itself as distinct and separate from its owners and shareholders. Shareholders have limited liability protection and are not personally liable for the business’s debts. As such, the legal obligations of the business cannot become the personal debts of the individuals involved in the entity, subject to Section 630 of the Business Corporation Law (BCL). In New York, the top 10 largest shareholders can be held responsible for unpaid wages owed to a company’s employees if the company fails to pay them.
C corporations can issue different types of stocks that allow owners to raise capital from investors. There is no limit on the number and nationality of shareholders that can be involved in a C corporation, which may be an attractive option for a business that wants to go public. The ability to offer stock options or shares can also be beneficial for owners who want to hire and retain top company officials. A C corporation can maintain its business regardless of shareholder changes, which can help with the future planning of the entity.
C corporations are subject to corporate income taxation. The owners and shareholders of a C corporation are taxed separately from the business. The business entity, owners, and shareholders are taxed, creating a double taxation. In a C corporation, the entity pays taxes on earnings before a distribution is made to the owners and shareholders. The owners and shareholders are then liable for personal income taxes on the distribution they receive.
Corporations must file tax returns (Form CT-3 or short form Form CT-4) and pay a franchise tax annually (see NY CLS Tax § 209). In addition, a foreign corporation must file a corporate tax return and pay franchise tax if it does business, owns or leases property, employs capital, or maintains an office in New York State (physical presence nexus).
Taxation associated with a C corporation can be complicated, so discussing tax consequences with a New York C corporation formation lawyer is important.
To establish a C corporation, the owner must first choose a business name and check if the name is available. They must also designate a registered agent, the individual or entity responsible for receiving legal documents. A New York C corporation lawyer can guide you through each step, from checking the business name availability to filing articles of incorporation.
Next, the owner or incorporator must draft and file the articles of incorporation with the Secretary of State and create bylaws that will serve as the rules of the business, including operational procedures, rights and obligations of shareholders and officers, and the administrative framework of the business. They must obtain an Employer Identification Number (EIN) for the entity.
They must then offer stock to shareholders, who are the owners of the business, and appoint a board of directors to oversee business operations. The board of directors will guide the business and make all major decisions for the entity.
There are many steps that need to accomplish to form a C corporation. An experienced attorney in New York City can guide business founders through the process of establishing their entity and starting operations.
Once the C corporation is established, the owner should hold at least one shareholder meeting per year and keep minutes of all meetings. They must also keep a list of the shareholders and owners and their ownership percentage and update it as necessary to ensure all information is accurate.
Deciding what type of legal entity you will create for your business is a major decision that will have lasting effects. A C corporation is a popular choice for business owners, but it is important to understand how that may impact your business. An experienced New York City C corporation formation lawyer can answer your questions and help simplify the complex process of incorporation.
Ready to form your C corporation? Schedule a consultation with Rodriques Law today to ensure your company starts on a solid legal foundation.
