Whether you’re a small business owner or a large corporation, selecting a C corporation is an important decision for your company. Creating a formal business entity helps protect you personally and can provide you with hundreds of tax advantages, depending on how you manage it. If your business is based in Dallas, understanding the nuances of local regulation is especially important, and consulting with experienced attorneys is invaluable. Here are the top five things to consider when selecting a C corporation.

1. Structure

When forming a C corporation, the first thing to do is to decide on the structure of the business. Determining how many owners the company will have, how the company’s decisions will be made, and how the owners will share in the company’s profits are essential steps to creating a successful C Corporation. Creating a detailed shareholders agreement or operating agreement in partnership with experienced lawyers will ensure that all of the parties involved in the business are on board and that all interests are appropriately addressed.

2. Taxes

The IRS classifies C corporations as separate taxable entities, meaning the company itself is liable for any taxes owed. This is a double taxation scheme, since owners must also separate their personal taxes from the taxes of the company. Also, as a separate taxable entity, a C corporation is subject to corporate taxes even if the company has no taxable profit, meaning that owners are likely on the hook for at least some taxes. Being aware of the potential tax implications of what you are establishing is important before moving forward.

3. Liability Protection

A C corporation is generally the best choice for preserving personal liability protection, since its shareholders and owners are not typically personally responsible for corporate debts and obligations. If the company faces a lawsuit, the assets and finances of the business are the only ones put at risk, as opposed to the personal assets of the owners. This is why properly setting up a C corporation is essential for businesses that are worried about potential lawsuits and other liabilities.

4. Funding & Capitalization

Upon forming a C corporation, the next step is to determine how the company will be funded. Will the owners invest the money themselves or will they look for outside investors? And how much funding will the company require? Determining the capitalization of the company is essential to its success, and understanding where the money will come from and how it will be divided is important for the survival and longevity of the business.

5. Ongoing Compliance

Creating and registering a C corporation is just the first step. Staying on top of any new laws and regulations that could affect your company and ensuring that the company is in ongoing compliance is of utmost importance. Failing to do so can lead to fines, penalties, and even criminal liability. Giving your business the best chance at success means staying informed of the ever-changing legal landscape and taking appropriate steps to make sure your business is compliant with all applicable laws.

Having a team of experienced legal professionals on your side ensures you understand all of the rules and regulations applicable to your situation. Dallas-based UpCounsel offers access to high quality attorneys on demand for businesses of all sizes, with profiles of online attorneys that include client ratings and reviews of recent work. Whether you need a one-time consult or a full legal department, UpCounsel can provide the legal assistance your business requires.

Topics:

c corporation,

business lawyer,

Dallas