KPMG Spark Blog

How Does a C Corporation Work?

What is the organizational structure of a C Corporation? How do shares work? How many Directors do I need? Get started with this primer.

How many directors do I need to form a C Corporation?

Most states only require one director, but you are allowed to have more than one listed. Some states use the number of shareholders in the C Corporation to determine the minimum number of directors. 

What is the organizational structure of a C Corporation?

The hierarchy of an C Corporation includes three groups: the shareholders, directors and officers. 

  • Owners of the C corporation are considered to be the shareholders; who are responsible for electing and removing directors, approving or disapproving major business decisions.
  • The board of directors are responsible for managing the C corporation. They are responsible for making major business decisions and are in charge of hiring, firing and managing officers, who make the day-to-day business decisions.
  • Officers are responsible for the day to day operations of the company.

* It is very common for C Corporations to only have one shareholder who also serves as the only director and officer. 

What are authorized shares of stock?

At the time of incorporation, C Corporations must state the number of shares of stock they wish to issue. The total number of authorized shares is the number of shares to be issued to the shareholders. Shares of stock are certificates of ownership in the C Corporation and each shareholder is issued certificates based their ownership value of the C Corporation. 

What is a share’s par value?

The par value of a share of stock is its minimum stated value. Common par values range from $0.01, $1.00 or no par. Par value typically does not equal the actual value of a share, this is normally determined by the price that someone is actually willing to pay or it is based on the book value of the company. For public companies, actual value is determined by the price investors are willing to pay for each share on the national exchange. 

How is a C Corporation taxed?

A C Corporation is taxed at both the corporate tax rate and its shareholders are taxed at the individual tax rates. First, business profits are reported and taxed at the corporate tax rates, any profit distributions made to shareholders in the form of dividends must also be reported as personal income, which would be taxed at their personal tax rate. This is commonly know as double taxation. To avoid double taxation, many business owners choose to make a special tax election with the IRS to be treated as an S corporation.

KPMG SparkOctober 29, 2015Posted In: Business Tips

Subscribe

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

KPMG Spark is an online accounting service that saves you time so you can focus on what’s most important for your business.

Planning to Pay Taxes Helps Build a Strong Financial Foundation

In order to run a successful business, you need to have a solid financial foundation. Planning to pay taxes is an important part of building this foundation. Join us as we discuss tax planning strategies to help your business plan for tax season.

KPMG SparkOctober 26, 2021Posted In: Tax Tips

How You Know it's Time to Hire a Bookkeeper

When you first open your business, you might be able to run everything by yourself. Eventually, hiring a bookkeeper will become a vital step to help ensure continual growth for your business. Continue reading for 5 signs that indicate it’s time to hire a bookkeeper for your business.

Alexandra OjalvoOctober 19, 2021Posted In: Business Tips

How Managing Cash Flow Can Help You Build a Strong Financial Foundation

Maintaining a healthy business cash flow is one of the most important building blocks for any business to be able to build a strong financial foundation. Continue reading for a few best practices for ensuring your organization has enough cash on hand.

KPMG SparkOctober 13, 2021Posted In: Business Tips

Why your bookkeeping may be holding you back from business success

Join us to learn how your bookkeeping may be holding back your business from functioning at its peak performance.

Aubry BlackOctober 5, 2021Posted In: Business Tips

Building a Strong Financial Foundation: Stay on Top of Bookkeeping

KPMG Spark works with many business owners and executives to simplify their bookkeeping. Continue reading to learn how keeping up with your bookkeeping will help you build a solid financial foundation for your business.

KPMG SparkSeptember 29, 2021Posted In: Business Tips

Hiring Help: How To Know Whether To Hire an Employee or Contractor?

There are many important differences between an employee and an independent contractor that can affect the financial foundation of your business. Continue reading to learn some of the financial impacts you should consider when making this decision.

KPMG SparkSeptember 22, 2021Posted In: Business Tips

Selecting an Entity Structure Helps Build a Strong Financial Foundation for Your Business

Running a successful business depends on a solid financial foundation. You can have the most sought-after products or services, a killer marketing strategy, and loyal customers, but if you don’t have a solid financial foundation to manage cash flow and support other business decisions, it can all come crumbling down. Continue reading to learn how selecting an entity structure can help build your financial foundation.

KPMG SparkSeptember 1, 2021Posted In: Business Tips

Real-Time Bookkeeping: 5 Valuable Insights You Can Gain From Real-Time Bookkeeping

Real-time bookkeeping uses live data to give you visibility into your current income and expenses, balances, and more. The visibility that real-time bookkeeping provides allows business owners to gain valuable insight into both their finances and businesses. Continue reading for 5 valuable insights you can gain from real-time bookkeeping.

Alexandra OjalvoAugust 24, 2021Posted In: Tax Tips

The importance of having a personalized bookkeeper

Having a personalized bookkeeper can provide valuable benefits to any business owner. A personalized bookkeeper can monitor and organize your business’s daily transactions. Not only that, they can also give you the reassurance and security you want to have about your company’s finances. Join us to learn more about the importance of having a personalized bookkeeper.

Aubry BlackAugust 17, 2021Posted In: Business Tips