Select Page

A U.S. C-Corporation as a Legal Entity

An Overview of Your U.S. C-Corporation as a Legal Entity

This page will cover how your U.S. corporation appears as a legal entity in corporate law.

A C-Corporation is a stock corporation similar to a German AG in its structure and function.

A C-Corporation is the best business entity on account of its legal certainty.

A C-Corporation has a clear edge.

We don’t recommend a Limited Liability Company (LLC) for our clients in Germany because of legal rights issues. In Germany, an LLC can lead to negative tax consequences.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Company Establishment

A C-Corporation can be established in any U.S. state.

You need to take care in deciding where, do consider the practicality of your location to customers and for employees etc.

Applicable Company Law

As in many places, a common law legal system applies throughout the U.S. However, US company law can vary from state to state, but the basics remain the same.

Incorporation Period

The length of time it takes to establish your corporation varies from state to state, anything from 2 days to 2 weeks.

Charter Fees

Similar to establishment fees, the price varies from state to state, anything from $50 to $500.

 

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Organs

Your C-Corporation will have the following “organs”:
  • President (Chairman of the Supervisory Board).
  • CEO
  • Director (Further Managing Director)
  • Treasurer (Chief Financial Officer)
  • Secretary

One can see several or all “organs” of the company. But unless specified, each organ is considered the general manager.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Share Capital and Shareholders

A C-Corporation has its registered capital divided into shares. The share capital can be set high and does not have to be paid in.

Different classes of shares can be issued just as in German AGs. Moreover, a C-Corporation can have unlimited shareholders.

C-Corporation shares can be traded on the stock exchange.

Registered Shares

In the U.S. registered shares are common. They are not managed electronically but on paper. Shareholders aren’t stored and published in any register – impractical for trading via an electronic stock exchange. The shareholders will have to agree to any electronic share management.

Shareholders’ Agreement

In regards to the shareholders’ agreement, regulations vary from state to state. Some states don’t require a shareholders’ agreement, others require an oral or written contract. Regardless, we advise all clients to draft a written shareholders agreement.

The shareholders’ agreement doesn’t need to be filed in the Register of Companies of the relevant state.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Liability

Liability in the U.S. is comparable to that of most European countries.

Thus, a C-Corporation in the U.S. is a Limited Liability Company.

The corporation is liable for all its assets and shareholders are only liable for the paid-in share capital and not their own personal assets. Company managers are only liable for personal assets if negligence or intent can be proven.

In extreme cases, the liability clause can have a limited effect. If it can be proven that a C-Corporation is being run with only a managing director and shareholder with the same petty cash source, and if the company is not regarded as a separate legal entity, then any liability protection can be restricted.

A Nevada C-Corporation is an exception. There it is legally stipulated that liability protection is not impaired, even in the case of poor management of the company.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Publication in the Register of Companies

Each state has its own Register of Companies.

These are available online.

What’s published in the Register of Companies can vary from state to state.

As a general rule it is management data and the address of the company. Shareholder detailers are not available in the register.

Ongoing Declaration Obligations in the Register of Companies (Annual Report)

In most states, an annual report is provided, but it is not required in all states. For example, Wyoming does not yet have a yearly report.

It is important to know that the annual report should not be confused with a tax return. The annual report is a note to the Register confirming the details of the company (e.g. register seat, management, company purpose etc.).

The states that don’t require an annual report require a biennial report instead.

The issuing and submission of the annual report are included in our yearly fee.

State fees are additional.

Annual Fees in the Register of Companies

Annual fees are different in all states also. In some states, you are only required to pay one fee when submitting your annual report. Other states require an additional franchise tax.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Taxation

U.S. C-Corporations pay a federal corporate tax of 21%.

Additionally, there are corporate taxes that may be levied at the state level. Dividends must be taxed with any capital profits at a rate of 0-37% depending on holding periods and tax codes.

The corporation tax return must be submitted by the 15th of April for the previous year. A further deadline of the 15th of October can easily be granted.

Aside from the corporation tax return, nothing has to be submitted to the authorities.

It is worth noting that you may also need to file a tax return at the state level.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

FREQUENTLY ASKED QUESTIONS ABOUT TAXES, COMPANY FORMATION AND RESIDENCY IN THE USA (FAQS)

We’ve compiled over 150 of the most frequent questions and answers (FAQs) on tax, company formation, and residency in the U.S. in our knowledge base. You can visit our knowledge base here.

If you find that your personal questions have not been answered, book a telephone consultation here.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US

Get Advice on Taxation, Company Formation, and Residency in the U.S.

If you already have a project that you want to implement in the U.S., you will most likely have already dealt with the intense framework conditions in the U.S. Online, you can find a wealth of information on almost every subject. Though all this information is available, it is common for one to reach a point of confusion. There are too many aspects to consider simultaneously and the starting position can be complex.

To solve this mental knot and pave your way to success, jump on a 1-hour telephone counselling session based on taxation, incorporation, and residency in the U.S. In this conversation, we will discuss specific technical issues such as tax, U.S. corporations or LLCs. Or we can discuss any strategic options you are considering.

Moving to the States – lock, stock and business – is not simple, but it doesn’t have to be hard either. We have a lot of information on line for you, but the Mount Bonnell ethos is that personal touch so lacking in so many of today’s businesses.

Like the Texas of old, we are true to our word. And like the founders of the Lone Star State we intend to make things as easy as possible for the people we work with so give us a call. We’re waiting – expecting even – that call about a question or questions you feel embarrassed to ask.  Whether technical, financial or personal, don’t be shy. We have heard them all before, and, what’s more we enjoy answering them.

So what are you waiting for, book a consultation and let’s get started.

Book an Expert Consultation on Building Your Business in the US, US Taxes and Moving to the US