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C Corporations: An overview, part 2

In our previous blog post, we gave an overview of some of the fundamental aspects of C corporations, including their advantages, disadvantages and whether a C corporation may be right for your business.

The first step in deciding whether a C corporation is the right option for your small business is to carefully consider a few more crucial factors. This conclusion will discuss important details of how C corporations are structured and managed.

How is a C corporation structured?

To be formally recognized, a C corporation must be structured to include all of the following positions:

  • Shareholders

Shareholders own the company's stock, elect directors, make business rules, and approve major decisions regarding the company.

  • Directors

The corporation's directors manage business affairs and have major input in electing officers and making major corporate decisions.

  • Officers

The president, secretary and treasurer compose the corporation's officers.

  • Employees

Employees work for the company and are paid hourly wages or a salary.

Running a C corporation

Once a small business has been incorporated, it is usually classified as a C corporation. There are several ways in which running a C corporation is different from running a small business. One important aspect of running such a business is to treat it like a corporation. This means doing things like:

  • Issuing stock certificates
  • Keeping corporate records
  • Holding regular board meetings
  • Keeping private and corporate accounts separate
  • Using the corporation's full name in all correspondence
  • Acting like a corporate officer
  • Investing enough capital to protect the corporation
  • Securing adequate insurance coverage

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