For many businesses, especially small and medium-sized ones, incorporating their business as a C-Corp is an important decision that can significantly influence the future growth of their enterprise. Choosing to incorporate as a C-Corp has a number of advantages that can create valuable legal and tax benefits for a business. However, it is important to understand all of the considerations and complexities involved in setting up a C-Corp, especially if a business is located in Chicago. There are many local regulations and laws that can affect the viability and success of a C-Corp, making it important for companies to understand these issues before embarking on the process of incorporation. Here, we break down the five most common things to consider when setting up a C-Corp in Chicago.

The first thing companies should consider when deciding to incorporate their business as a C-Corp in Chicago is the availability of resources to help with the process. Although incorporating a business is possible without the help of experienced legal counsel, there are many complexities associated with a C-Corp that require the guidance of an experienced professional. It is important to use the services of a lawyer familiar with the legal environment in Chicago and who can provide advice specific to the needs of the business. Fortunately, those living in Chicago have access to numerous legal resources that can make the process much easier, such as UpCounsel, a network of experienced attorneys who provide businesses with high quality, cost-effective legal services.

Second, businesses must consider the legal structure of the entity. C-Corps are recognized under state law as separate entities. This means that they are separate from their owners and have their own legal rights and duties under the laws of the state. Business owners should be familiar with the governing documents of C-Corps and the laws that pertain to them in order to be able to properly manage and protect the company’s assets. It is important that business owners know what types of documents must be filed with the state's Secretary of State in order to be in compliance with the legal requirements of a C-Corporation.

Third, businesses must be aware of the taxation implications associated with a C-Corp. C-Corp owners are taxed twice — once at the corporation level and a second time at the personal level. This can lead to higher overall tax burdens, so it is important to understand how the taxes will be imposed on the business as well as on its owners. It is also important to understand the tax benefits associated with a C-Corp such as deductions for certain types of business expenses.

Fourth, businesses should understand the potential for limited liability associated with a C-Corp. In general, the investors and owners of the corporation are not held personally liable for the actions of the business itself. This means that, in the event of legal action or lawsuits, the owners can be insulated from personal financial loss. This protection is especially important for those engaged in high-risk activities.

Fifth, small companies should understand the restrictions regarding ownership and transferability of stock associated with a C-Corp. Because of the entity’s separate legal status, C-Corps are restricted to a certain amount of shareholders and have limitations on the transferability of their shares. It is important to understand these restrictions before setting up a C-Corp in order to protect the legal rights of the company’s owners and investors.

For businesses located in Chicago, setting up a C-Corp can bring a variety of benefits and potential legal protections. However, there are many requirements and restrictions associated with such a corporate entity. It is important for a business owner to be aware of all the legal considerations that must be addressed when setting up a C-Corp in order to ensure that their incorporation is done according to state law.




Business Law