A C-Corporation is a separate legal and taxable entity. Unlike an LLC, it has its own tax return, its own shareholders, and a formal governance structure of directors and officers. It's the standard structure for startups planning to raise venture capital, go public, or take on foreign investors — and it's more paperwork than an LLC.
What a C-Corp actually is
Three distinct roles keep a C-Corp running:
- Shareholders — own the company through shares (common and/or preferred stock).
- Directors — elected by shareholders, set policy, approve major decisions.
- Officers — the CEO, CFO, secretary, etc. appointed by the board to run day-to-day operations.
In small companies the same people hold all three roles. Legally, though, you must track them separately — decisions need board approval and shareholder votes to count.
When a C-Corp is the right call
A C-Corp makes sense when:
- You'll raise venture capital — investors require a C-Corp structure (almost always Delaware) because it supports preferred stock, option pools, and clean corporate governance.
- You plan to go public — IPO-track companies are C-Corps.
- You have foreign shareholders — C-Corps have no ownership restrictions; anyone can own stock, which matters if your co-founder or investor is overseas.
- You want tax benefits available only to C-Corps — like certain fringe benefits, and access to venture-capital ecosystem norms.
It's usually the wrong choice for a lifestyle business, a consultancy, or a services company — the double tax below eats your profits with no upside.
The double tax, explained
This is the trade-off that makes C-Corps wrong for most small businesses:
- The corporation pays corporate income tax on its profit.
- When you distribute the remaining profit as dividends, you pay personal tax again.
An LLC avoids this by passing profit straight through to your personal return (one level of tax). A C-Corp gets two levels — which is why most small businesses never touch the C-Corp structure.
How to form a C-Corp, step by step
- Choose a name that meets state rules and ends in "Corporation", "Inc.", "Co.", or the state's required designator.
- Pick your state — Delaware for fundraising, your home state otherwise (see our state guide).
- Decide your authorized shares and par value — the ceiling your corporation may issue, set in the Articles. Founders typically authorize 10,000,000 with a $0.00001 par value to keep Delaware franchise tax low.
- File the Articles of Incorporation with your state — this is the official "birth certificate."
- Appoint a registered agent — required in every state.
- Elect directors and appoint officers — the first board meeting (or written consent) formalizes this.
- Adopt Bylaws — your corporation's internal rulebook: meetings, voting, officers' duties, share transfer rules.
- Issue stock — record who owns what in the stock ledger and issue certificates.
- Get an EIN and open a business bank account.
- Run ongoing governance — annual meetings, minutes, and state reports.
Governance is not optional
The liability shield that makes a corporation attractive only holds if you act like a corporation:
- Hold an annual shareholder meeting and record minutes.
- Hold board meetings (or pass written consents) for major decisions.
- Keep corporate records — stock ledger, bylaws, minutes, filings — in one place.
- Never co-mingle personal and corporate funds.
If you don't, a court can "pierce the corporate veil" and hold you personally liable.
What it costs
| Item | Notes |
|---|---|
| State filing fee | $90–$500 depending on state + filing speed |
| Registered agent | $149/year with us (LegalZoom: $249) |
| Bylaws | $50 with us (LegalZoom: $99) |
| Stock certificates | $29 with us (LegalZoom: $79) |
| Annual meeting minutes kit | $49 with us (LegalZoom: $99) |
Common questions
Can I convert from an LLC to a C-Corp later? Yes — usually through a reincorporation or statutory conversion. It's doable but has tax consequences, so it's worth getting the structure right up front if you know you're fundraising.
Do I need par value? Yes, the Articles require a stated par value, but it's a legal floor, not a price. Most founders set it at $0.00001 or $0.0001 and issue shares at whatever the real valuation is.
What's the difference between authorized and issued shares? Authorized is the ceiling (set in the Articles); issued is what you've actually given out. The gap stays in reserve for investors and employee options. See our full guide on shares and par value.
How much does a CPA cost for a C-Corp? More than for an LLC — two returns (corporate + personal), bookkeeping, and payroll if you have employees. Factor that into the decision.
Ready to start your C-Corp?
We file your Articles with the share structure, bylaws, and stock certificates handled — and a CPA reviews the setup before we file.