Once you charter a corporation, it becomes a legal entity that can own assets, carry debt, and even pursue legal action against other parties. There are benefits and drawbacks of this type of business entity, and understanding them is critical for anyone weighing their options. Before you set up a business of your own, consider discussing your options with an Alamo Heights C-corporation lawyer.
Choosing the wrong structure for your business can have lasting consequences. Before you decide, reach out to skilled business attorney Sasha Begum today.
This business structure could provide you with some significant benefits, depending on the circumstances. It is one of the best options for companies with a large number of shareholders. Some benefits include:
Shareholders of C-corporations are shielded from company liability on a personal level, meaning their individual assets cannot be seized to satisfy creditors of the corporation. Not all business structures offer this type of protection.
Another major benefit of this business structure is the flexibility of buying or selling a stake in the corporation. C-corporation ownership is reflected in shares, which are easy to transfer or sell.
Unlike LLCs and certain other structures, there are no limitations on the identity of shareholders in a C-corporation. Shareholders do not have to be United States citizens, and they can be a variety of business entities as well as individuals. Unlike S-corporations, C-corporations also allow for more than one class of stock.
All types of businesses have downsides, and C corporations are no exception. The disadvantages can be significant, especially for smaller businesses. An experienced C-corporation attorney in Alamo Heights could answer your questions and provide solutions for these challenges.
In most cases, the greatest downside for this type of entity is double taxation. A C-corp must pay income tax on its annual profits. However, shareholders must also pay taxes on the dividends they receive. The end result is that the same income is taxed twice by the government.
C-corporations also face a higher level of regulation and oversight compared to other business structures. This includes hefty recordkeeping obligations and reporting requirements. C-corporations must have meetings and keep written records of votes.
This option is typically more costly than other businesses. The added costs and complexities mean that a C-corporation is not the ideal entity in every situation.
Multiple steps are necessary when forming a new corporation in Texas. There are strict rules for naming conventions, and the company name must include the words or abbreviations of ‟Corporation,” ‟Incorporated,” ‟Company,” or ‟Limited.”
Other important steps in operating a C corporation after formation include naming officers, conducting shareholders’ meetings, leasing offices, and drafting corporate bylaws. When you work with the Alamo Heights C-corporation attorneys of Begum Peláez-Prada PLLC, you have guidance supported by years of experience.
You have a lot to decide when setting up a new business. One of the first decisions you may make is selecting the type of structure for your company. C corporations are a strong option in many cases, but there are complexities and downsides to be aware of.
The good news is you do not have to navigate these legal and regulatory issues on your own. Contact an Alamo Heights C-corporation lawyer to learn how they could help throughout this process. We proudly serve San Antonio and the surrounding areas, including Dreamhill Estates, Los Jardines, Olmos Park, Prospect Hill, Terrell Hills, and Tobin Hill.
