Establishing Corporate Foundations

Corporations are legal entities that are separate and distinct from their owners, also known as shareholders. Corporations offer many advantages and disadvantages depending on what type of business you are starting, or have, and what goals you have for your company. Hiring a business attorney to help you determine if a corporation is the right business entity for you and navigate the legalities and requirements that come with forming a corporation allows you to focus on the business piece of your company while the legalities are handled correctly and efficiently.  The attorneys at West & West, Greer & Estorga can help business owners throughout Texas, including Central Texas, South Texas, the Texas Hill Country, San Antonio/Bexar County, Seguin/Guadalupe County, Kerrville/Kerr County, Bandera/Bandera County, New Braunfels/Comal County, and Boerne/Kendall County determine which business entity is best for them.

An essential aspect of C-Corporations is their ability to offer limited liability protection to shareholders, shielding them from personal liability for the company’s debts and obligations….

C-Corp.

Corporations come in all shapes and sizes. There is a growing number of corporation types. However, a C-Corp. is the type of corporation most people most often think of. C-Corps have many advantages and disadvantages, depending on what type of business you are starting.

Some advantages of C-Corps are:

  • Limited Liability: Corporations will generally shield its owners (shareholders) from personal liability for the company’s debts. This protection can extend to directors and employees as well in many situations.
  • Continuity: Corporations are not affected by the death of shareholders or transfers in ownership. The company can continue indefinitely, unless it is otherwise terminated.
  • Capital: Capital can be raised by selling stock in the company to investors, who have limited liability, potentially making it easier to raise capital.
  • Retained Earnings: Profits and losses are not passed through to owners individually. This allows the company to keep profits in the company with fewer tax implications to owners than some other types of entities.

Some disadvantages include:

  • Double Taxation: A corporation’s profits are taxed at the corporate (business level) and shareholder’s are taxed individually on the distributions they receive.
  • Start-up Costs: Corporations are more complex than other types of business entities and can cost more to start-up than some other types of entities.
  • Regulations and Formalities: Corporations lack the flexibility that some other entity types have and have certain formalities they must follow. These include: having a board of directors, holding shareholder’s meetings, and filing annual reports. Tax preparation can also be more complex for corporations.
Corporations

If you are thinking about starting a new business or need a lawyer to help with your existing business contact us today.

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Matthew Johnson

Attorney, Shareholder

West & West, Greer & Estorga

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