“C” refers to Subchapter C of the Internal Revenue Code and describes how the corporation’s profits and losses will be treated. All for-profit corporations are automatically C Corporations when formed. A C Corporation reports income and losses on a corporation tax return and pays taxes on its profits at corporation tax rates. The “C” designation is strictly a tax classification and has no bearing on the structure of the corporation or the limited liability protection afforded the shareholders of the corporation.

The person forming a corporation is known as the Incorporator. This may be one of the principals of the corporation or an attorney or service company preparing and filing the Articles of Incorporation with the state.

One individual may fill all of the required capacities: i.e., as the sole shareholder and director, and serving as president, secretary, and treasurer or chief financial officer.

Incorporating only provides you the exclusive right to use your corporate name (or any name “confusingly similar” to it) in your incorporating state. It will not keep another business from using your corporate name as its business name by filing a D.B.A. for a different business form (e.g., a sole proprietorship or partnership).

Registering your corporation’s name as a trademark or service mark, either federally or with your state, alerts other businesses that you claim priority rights to use your corporate name within the state(s) in which you do business. Registering a mark may provide additional protection against another business using your corporation name, but the concept of name ownership is a fairly complex one.

There are very few restrictions on who may serve as a director or an officer of a corporation.

The most important restriction is that only natural persons may serve. This means that a corporation (or any other business entity) may not serve as a director or officer.

The other restrictions deal with legal capacity to contract. Individuals less than eighteen years of age, or who are mentally incompetent, may not enter into legally binding agreements and therefore cannot serve as directors or officers in most states.

Shares are ownership units in a corporation, and are evidenced by a stock certificate of the corporation. A stock certificate indicates the number of shares issued to a shareholder. A share entitles its holder to a proportionate share of the assets of the corporation, whether by dividend payments or upon the ultimate distribution of its assets when the corporation is dissolved (terminated). Shares also confer other rights to shareholders, such as the right to vote and attend meetings.

Yes, even if you are the only owner (shareholder). There are two main reasons:

First, issuing shares of stock is a corporate formality, which must be followed to assure compliance with all of your state’s statutory requirements with respect to proper formation of a corporation. Completing this formality is also important in preserving the limited liability protection for shareholders.

If the shares of your corporation have a “par value” (see question below about par value), the number of shares issued to a shareholder should be a mathematical calculation based on the value of the items contributed to the corporation by the person to receive the stock and the par value established for each share. For example, if the corporation established a par value of $1.00 per share and a person contributes $1,000 in cash or property to the corporation, he should receive 1,000 shares of stock.

If your corporation’s shares do not have a par value (called “no par” stock), then the number of shares issued to each shareholder should reflect the ownership percentage that each shareholder is intended to have. For example, if a total of 100 shares of the authorized shares will be issued to two shareholders, one of whom will own 75% of the corporation and the other 25% of the corporation, they should be issued 75 shares and 25 shares, respectively.