FAQ's
What is a C
corporation?
The standard corporation, also called a C
corporation, is the most common corporate structure.
To create a C corporation the proper formation
documents must be filed with the appropriate state
agency and the necessary state filings fees paid.
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What paperwork is required to incorporate?
A certificate of incorporation conforming to Texas
law must be prepared and filed with the proper state
authority, and filing fees must be paid.
All you need to do is complete the intake order form
or place an order by phone and we will prepare and
file your certificate of incorporation. It’s simple,
just fill out the intake form or call our office at
713-524-1920 to get started.
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Who can
form a C corporation?
There are no restrictions as to who can form a C
corporation. There are no age, residency or other
legal requirements.
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What should I name my C corporation?
Choose the name of your C corporation carefully. It
is very important that you portray the image you
want for your new C corporation. Legally, the name
you select must not be “deceptively similar” to any
existing corporation or must be “distinguishable on
the record” of your state. For example, if a
corporation named Flower Corp. exists in your state,
you probably would not be allowed to name your
business Flour Inc. It is possible that the name you
select will not be available; therefore we ask for a
second choice on the incorporation order form.
Additionally, the name you choose must show your
business is incorporated. Texas requires that the
corporate name be followed by a corporate ending
such as "Corporation," "Incorporated," or an
abbreviation such as "Inc." or "Corp."
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What is double
taxation?
Double taxation occurs when a C corporation's
profits are taxed at both the entity and individual
levels. Profits of the business are reported and
taxed at the entity level first. Then, if the C
corporation distributes any part of the remaining
profits to the shareholders in the form of
dividends, the shareholders must report the dividend
as personal income and pay taxes on it at the
individual level. To avoid double taxation, many
business owners choose to make a special election
with the IRS to become an S corporation.
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What are authorized shares of stock?
C corporations must indicate the number of shares of
stock they wish to authorize (and a par value
associated with each share) in the articles of
incorporation. The number of authorized shares is
the total number of shares available for a C
corporation to issue to shareholders; however the
C
corporation does not need to issue the total number
of authorized shares. Some C corporations opt to
hold a certain number of un-issued shares in order
to add additional owners at a later date or to
increase the ownership percentage for a current
shareholder. An issued share of stock shows
ownership in the C corporation and each shareholder
obtains a certificate representing the ownership
value of the C corporation.
C corporations can alter the number of authorized
shares or the par value of shares at anytime in the
life of the C corporation by filing an share
amendment with the state.
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What is a
share’s par value?
The par value of a share is its minimum stated
value. Par value typically does not correlate to the
actual value of a share. Common par values are
$0.01, $1.00 or no par. The actual value of a share
is its fair market value, or what someone is willing
to pay for a share of stock. For public companies,
actual value is determined by the price investors
are willing to pay for each share on the national
exchange. For private companies, the actual value of
a share is typically determined by the overall value
of the C corporation or the book value.
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What is the organizational structure of a C
corporation?
The organizational structure of a C corporation
relies on three basic groups: shareholders,
directors and officers.
A C corporation is owned by shareholders; however,
they do not directly manage the C corporation.
Instead, they influence corporate decisions through
indirect methods such as electing and removing
directors, approving or disapproving amendments to
the articles of incorporation and voting on major
corporate issues.
The directors, who comprise the “board of
directors,” are responsible for managing the affairs
of the C corporation. Usually, directors make only
the major business decisions. They also appoint and
supervise the officers, who make the day-to-day
business decisions of the C corporation.
Officers are responsible for the everyday management
of the C corporation.
It is important to note that a shareholder may serve
on the board of directors and as an officer. In
fact, most states allow C corporations to have only
one shareholder who also serves as the sole director
and officer.
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How many directors do I need to form a C
corporation?
Only one director is required in Texas although you
are allowed to have more.
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How do I get started with the incorporation process?
After making the decision concerning what entity
structure is best for your business, articles of
incorporation must be filed with the state
government and initial fees must be paid. We can
help you satisfy this step.
After your certificate is filed, your C corporation
must hold an organizational meeting where bylaws are
adopted and the incorporation process is completed.
Share certificates should be distributed to
shareholders and these transactions should be
recorded on the C corporation's stock ledger. All of
this information should be kept in a corporate
record book.
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What is
Rush Filing service?
As the quickest way to form your business, the Baba
Law Firm offers a Rush Filing Service option to gain
state approval of your formation in either the same
day (depending on time of order) to 24-48 hours. We
strive to complete your order the same day in most
situations. This high priority service only costs an
additional $79 to your order.
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How soon will I receive my documents?
It is important to note that the 24 or 48 hour
filing time is for the formation only. It typically
takes longer for the states to produce the filed
documents. Once we receive your documents from the
state, we will ship them to you via FedEx Overnight
delivery. This means you should have your documents
in hand anywhere from just a few days to one week
after filing.
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Why should I include Rush Filing with my formation
service?
Using our Rush Filing service secures your name and
filed date in as little as 24 hours. This service is
particularly valuable when you need proof of
formation to secure a contract or open a bank
account.
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