Corporation
If you’re looking to protect your assets, attract investors, and expand your business on a solid footing, forming a U.S. corporation is the best option. With limited liability, tax benefits, and credibility with clients and partners, a C Corporation or S Corporation offers you stability and growth.
Introduction
The capital society par excellence, especially for the American businessman, is the Anonymous Society, called in the United States “Corporation” and translated as Corporation. There are two types of Corporations.
The “C” Corporation is equivalent to the traditional Anonymous Society, in which the partners that constitute it have their liability limited to the capital contributed to the company. The “C” Corporation pays taxes at the federal level on its corporate profits and, when it distributes dividends to its partners, they must also pay taxes at the federal level on the benefits they receive.
When a Corporation has fewer than seventy-five partners , all of them individuals and at the same time all of them Permanent Residents (“Green Card “) in the United States, the Corporation can apply to be classified as an “S” Corporation , whose main characteristic is its tax treatment: the “S” Corporation obtains fiscal transparency, so that the profits and losses of the company are attributed directly to the partners .
Thus, the company does not pay taxes on its corporate profits, and only the partners pay taxes on the profits attributed to them individually. Foreigners who are not residents of the United States can only choose to form a “C” corporation.
Constitution and Registration
A corporation is formed in the state where it wishes to be established by filing and registering its Articles of Incorporation with the Department or Secretary of State . This document first states the name of the company, which must be accompanied by the words “Corporation” or “Incorporated” which can be abbreviated as “Corp” or “Inc.”
Unlike the Articles of Organization of an LLC, the Articles of Incorporation state the corporate purpose, which can be described in detail or very generically, such as “any legally permitted activity.” The number of shares held by the corporation must be stated in the Articles of Incorporation. The par value of each share can be specified, thus determining the capital stock of the corporation, although this is not required by law.
In a corporation, the administrator is called a director (“director”). The names of the corporation’s officers, who are the president, secretary, and treasurer, must also be included. They constitute the corporation’s board of directors, meeting in council. A shareholder of a corporation may be appointed a director whether a natural or legal person.
Once the company’s Articles of Incorporation have been registered, the Director (s) constitute a Board of Directors, and a Minutes ratify the acts of incorporation and registration of the Corporation. The company’s Directors, typically the President, Secretary, and Treasurer, are appointed; and finally, the company’s Shareholders are named.
This document is also called in the Corporations the Organizational Council Minutes (“ Written Consent to Organize ”) and, as previously noted, is the first Board Minutes that initiates the organization and operation of the company. The Minutes are a private document that is not registered in any public registry. Based on the Organizational Board Minutes, the Director or Directors issue to the company’s Partners the Share Certificates (“Share Certificates ”) that represent each Partner’s percentage of interest in the company, and which also constitute non-registrable private documents.
Finally, the Director or Directors approve, and certify in the Minutes, the Bylaws for the company’s operation. The Bylaws , in accordance with State law, regulate the Directors (duties, remuneration, appointments, vacancies, dismissals, convening, notification, quorums, and board voting), Partners’ Meetings (regular and extraordinary meetings, location of the meeting, notification, quorum, voting, and representation), Corporate Minutes and Financial Statements; Distribution of Benefits, Participations and Modification of the Statutes.
Operation
The day-to-day administration of the Corporation is carried out by its Directors— the President, Secretary, and Treasurer—who respond to the instructions of the Corporation’s Director or Board of Directors. The Corporation’s Members, known as Shareholders, meet annually at the Regular Meeting and also whenever a Special Meeting is called.
The Bylaws regulate regular and special meetings, the location of the meeting, notice, quorum, voting, and representation. Corporations must file their Tax Return by March 15 of each year, but may request an additional six-month extension before that date.
