When you charter a corporation, it acquires a life of its own. It can enter contracts, incur debts, get sued, and earn money to become profitable. Your entity choice at the time of charter is automatically designated a C-corporation unless you elect a Subchapter S designation—an Internal Revenue Service (IRS) tax classification.
S-corporations do have the advantage of a pass-through tax structure, meaning profits and losses are reported on shareholders’ personal tax returns, avoiding double taxation. However, C-corporations also have many benefits, depending on your goals. A seasoned San Antonio C-corporation lawyer at Begum Peláez-Prada PLLC could help you define those goals and act on them with confidence. Call a corporation formation attorney at our firm today to get started.
There are numerous advantages to pursuing a C-corporation structure. For example, only C-corporations trade on U.S. stock exchanges. Many large C-corps are owned by millions of shareholders around the world. In comparison, no more than 100 U.S. residents—with exceptions for family members—can own stock in S-corporations.
Other advantages of C-corps include:
Generally, executives and officers of C-corporations are shielded from lawsuits and company debt, although the corporate veil can be pierced for criminal acts. If you are considering chartering a C-corp, speak to San Antonio lawyer Sasha Begum, who has almost 20 years of international law firm experience, including as corporate counsel.
When you file charter documents for your company with the Texas Secretary of State, you must file Form 2553 with the IRS. You will have the option to check the box for an S designation or leave the box blank for a C designation. Regardless, the form must be signed by all shareholders and submitted within 75 days of either beginning operations or acquiring the first asset or shareholder other than yourself.
S-corporations do not pay taxes because the profits and losses are passed to the limited number of shareholders who declare them on personal returns. C-corporations pay corporate taxes, although they can distribute profits to shareholders as taxable dividends.
A well-practiced San Antonio attorney could explore whether you want to trade publicly, expand after raising money, or avoid double taxation when determining whether a C-corporation is the best option for your needs.
Once your company is a C-corporation, there are many necessary actions to take over the life of the company. You must conduct a shareholders’ meeting to appoint directors, allocate founding shares, and possibly name officers. Additionally, you will need:
For comprehensive and attentive support for all your corporate needs, the San Antonio team at Begum Peláez-Prada PLLC is ready to help.
You must choose an entity to operate your business, so if you are considering a C- or S-corporation, you should know the differences. We base our discussions with you on your goals and vision for your company. We offer realistic advice along with continued support during the life of your business.
If you envision going public, raising money to expand, or welcoming thousands of shareholders into the fold, a San Antonio C-corporation lawyer from Begum Peláez-Prada PLLC could guide your journey. Call today.
