Free Corporation Guide

U.S. Corporations: Everything You Need to Know

Learn how to start your Corporation the right way! Whether you want to learn how to start your corporation yourself or hire us to form your corporation for you, you’ll find the easiest path forward with our pro tips and choices all outlined below.

What Is A Corporation?

A corporation is a legal entity that is separate and distinct from its owners. It is often referred to as a “legal person,” meaning that it has many of the same rights and responsibilities as an individual.

In a corporation, the owners are referred to as shareholders. They own the company through the purchase of shares of stock, and they elect a board of directors to manage the corporation. The board of directors hires the company’s management team to run the day-to-day operations of the business.

There are several types of corporations, including C corporations, S corporations, and nonprofit corporations. C corporations are the most common type of corporation and are taxed as separate entities. S corporations are taxed differently than C corporations, and nonprofit corporations are not taxed at all because they are organized for charitable or educational purposes.

In general, the main advantage of forming a corporation is the limited liability protection it provides to its owners. This means that the shareholders are not personally liable for the debts and obligations of the corporation. However, there are also some disadvantages to forming a corporation, including the increased complexity and cost of setting up and maintaining the business.

A corporation is created by a filing form called an Articles of Incorporation typically with your state’s Secretary of State office, or similar government agency, and paying a one-time filing fee.

The formation date of an Incorporation refers to the date on which the corporation was legally established and registered with the state in which it is located. The consequences of the formation date of a corporation can vary, but may have some potential implications in certain states such as Delaware.

History Of The Corporation

The concept of the corporation has a long history, dating back to ancient Rome. However, the modern corporation as we know it today began to emerge in the United States in the late 18th and early 19th centuries.

One of the first corporations in the United States was the Bank of North America, which was chartered by the Continental Congress in 1781. In the following decades, other corporations were formed to finance and operate infrastructure projects, such as canals and railroads.

The Industrial Revolution in the late 19th century also led to the growth of large corporations, as businesses began to mass-produce goods using assembly line techniques. This led to the emergence of “trusts,” which were groups of corporations that controlled a particular industry or market. The Sherman Antitrust Act of 1890 was passed in response to concerns about the concentration of economic power in these trusts.

Today, corporations play a central role in the economy of the United States and around the world. They are a common form of business organization and are often used to raise capital, conduct research and development, and expand operations.

What Are The Different Types Of Corporations?

There are several types of corporations, including:

  1. C corporation: This is the most common type of corporation and is taxed as a separate entity from its owners. C corporations can have an unlimited number of shareholders and can issue different types of stock.
  2. S corporation: This type of corporation is similar to a C corporation, but it is taxed differently. S corporations are not taxed at the corporate level, and instead, the profits and losses of the business are passed through to the shareholders, who report them on their individual tax returns. S corporations are limited to 100 shareholders and can only issue one type of stock.
  3. B corporation: Also known as a benefit corporation, a B corporation is a for-profit company that is committed to achieving social and environmental goals in addition to generating profits. B corporations are recognized in some states as a distinct legal entity and are held to higher standards of transparency and accountability.
  4. Nonprofit corporation: This type of corporation is organized for charitable, educational, or other types of public benefit purposes. Nonprofit corporations are not taxed on their income, and they are required to use their profits for the benefit of the organization rather than distributing them to shareholders.
  5. Closely held corporation: This type of corporation is owned by a small group of individuals, often family members or business partners, who have close control over the company’s operations. Closely held corporations may be C corporations, S corporations, or some other type of business structure.
  6. Statutory Close Corporation: The term “Close Corporation” or “Closed Corporation” or “Closely Held Corporation” is often used to describe a private corporation formed under regular state corporation laws where the stock is not publicly traded. This is different from a statutory close corporation, such as the Wyoming Close Corporation which is created under special state laws. A Wyoming Close Corporation is a type of business entity that is formed under the laws of the state of Wyoming. It is characterized by having a maximum 35 shareholders and providing them with greater control over the management and direction of the company. Wyoming Close Corporations offer more flexibility in terms of management structure, shareholder rights and responsibilities, and may have more relaxed regulatory requirements compared to other forms of business entities.
  7. Publicly held corporation: This type of corporation is owned by a large number of shareholders and is listed on a public stock exchange. Publicly held corporations are required to follow strict disclosure and governance requirements, and they are subject to the oversight of regulatory agencies such as the Securities and Exchange Commission (SEC).

A Wyoming Close C-Corporation is a popular choice both for U.S. and Non-U.S. owner(s) / shareholder(s). Please click here to find out more about Wyoming Close Corporations.

The Effective Date Of Formation For A Corporation

The effective date of formation for a corporation is the date on which the corporation legally comes into existence. This date is typically the date on which the articles of incorporation are filed with the appropriate state agency, such as the Secretary of State.

It is important to carefully consider the effective date of formation when forming a corporation, as it can have significant legal and financial implications. The consequences of the formation date of a corporation can vary, but some potential implications may include:

  1. Tax implications: The formation date of a corporation may affect the tax year in which the corporation is required to file its taxes.
  2. Legal liabilities: The effective date of formation determines when the corporation’s legal liabilities and obligations begin to accrue. This means that any debts or obligations that the corporation incurs before the effective date of formation are not the responsibility of the corporation.
  3. Transfer of ownership: The effective date of formation may also be relevant in the context of transferring ownership of the corporation. For example, if a shareholder sells their shares in the corporation before the effective date of formation, they may not be entitled to receive any of the corporation’s profits or assets.
  4. Duration: The effective date of formation also determines the duration of the corporation. In most cases, corporations have an indefinite lifespan, unless they are dissolved by the shareholders or by the state.

On our Delaware Corporation formation forms, there is an “Effective Date of Formation” field for the date that the corporation is formed. In the state of Delaware, you can enter an effective date up to 90 days in the future for this field. The date of submission to the state will be the filing date, but the corporation’s formation will not be considered official until the effective date.

In Wyoming, the effective date of formation for a corporation does not have the same implications as it does in Delaware. In Wyoming, annual reports for corporations and LLCs are due on the first day of the anniversary month of the entity’s formation. For example, if a corporation’s initial filing date is December 30th, its annual report will be due on December 1st every year.

It is important for owner(s) of a corporation to be aware of the potential consequences of the formation date of their corporation and to consult with a legal or financial professional if they have any questions or concerns.

How A Corporation Pay Taxes?

A corporation is a separate legal entity from its owners and is taxed as such. This means that the corporation is responsible for paying its own taxes on any profits it generates.

In the United States, corporations are subject to federal income tax and may also be subject to state and local income taxes, depending on the jurisdiction in which they operate.

The tax rate for corporations is generally higher than the tax rate for individuals. In 2021, the tax rate for C corporations ranges from 15% to 21%, depending on the amount of income earned. S corporations and other types of corporations may be taxed at different rates.

Corporations may also be subject to other types of taxes, such as employment taxes and excise taxes.

In general, corporations are required to file a tax return each year, even if they do not owe any taxes. The tax return must be filed by the corporation’s tax return due date, which is typically the 15th day of the third month after the end of the corporation’s tax year.

If a corporation does not pay its taxes when they are due, it may be subject to interest and penalties. It is important for corporations to carefully manage their tax obligations to avoid financial difficulties.

Limited Liability

Limited liability is a legal concept that protects the owners of a corporation, also known as shareholders, from being personally liable for the debts and obligations of the corporation. This means that if a corporation is sued or incurs debt, the shareholders’ personal assets, such as their bank accounts and personal property, cannot be seized to pay off the debts of the corporation. The shareholders are only at risk of losing the money they have invested in the corporation, known as their capital contribution.

Limited liability is one of the main advantages of incorporating a business, as it helps to reduce the risk for business owners and makes it easier for them to secure financing. However, it is important to note that limited liability does not protect shareholders from liability for their own actions, such as fraud or gross negligence.

In a corporation, the shareholders’ personal assets, such as their homes, cars, and savings, are generally protected from the claims of creditors and other third parties.

A creditor cannot go after your personal assets

If the corporation is sued or incurs debt, the creditors can only pursue the assets of the corporation, not the personal assets of the shareholders.

However, it is important to note that limited liability is not absolute for a corporation’s shareholders. In order to maintain limited liability protection, it is important for corporation owners to follow corporate formalities, such as holding regular meetings and keeping thorough records of corporate decisions. This helps to demonstrate that the corporation is a separate entity from its owners and is being run in a professional and responsible manner.

Bylaws Of A Corporation

In a corporation, the operating agreement is typically referred to as the bylaws. The bylaws of a corporation outline the internal rules and procedures for how the corporation will be run, including the rights and responsibilities of the shareholders, the duties and powers of the board of directors and any officers of the corporation, and the process for making major business decisions.

Bylaws are an important document for any corporation, as they help to ensure that the corporation is run in a consistent and transparent manner and can serve as a reference point for resolving disputes that may arise among the shareholders. The bylaws should cover topics such as the management and administration of the corporation, the distribution of profits and losses, and the process for making major business decisions.

In some cases, the bylaws may also include provisions for handling the transfer of ownership interests in the corporation and for dissolving the corporation in the event that it is no longer viable.

The bylaws of a corporation are typically adopted by the board of directors and approved by the shareholders at the time the corporation is formed. They can also be amended by the board of directors or the shareholders as needed, provided that the necessary procedures for amending the bylaws are followed.

It is important for the shareholders of a corporation to carefully review and negotiate the terms of the bylaws, as they will have a significant impact on the operations and management of the corporation. The bylaws should be kept up to date and should be reviewed periodically to ensure that they are still relevant and reflect the current needs and goals of the corporation.

Privacy & Anonymity

Starting a business can raise concerns about personal privacy for many owners. While corporations, require public state filings, they do offer the potential for privacy and anonymity. As separate legal entities from their owners, known as shareholders, corporations do not publicly disclose the personal information of their members in certain states. However, in most states, ownership information must be disclosed when a corporations is formed. To protect privacy to the extent possible, it is advisable to hire a reputable business formation or registered agent service that can assist with keeping certain information private.

It is important to note that the privacy benefits of a corporation are not absolute. For example, the names of the owners and shareholders of a corporation may be publicly available through state business records. Additionally, depending on the state, corporations may be required to disclose certain information, such as financial records, to regulatory agencies or the public.

Wyoming is a popular choice for those seeking privacy with their corporations. The state’s strict privacy laws make a Wyoming corporation particularly advantageous. Wyoming’s Secretary of State has minimal reporting requirements, and there is no income tax for corporations or individuals in Wyoming. They only require that a company list a registered agent and an address to which legal documents can be delivered. The registered agent acts as the company’s face. Annual reports request an officer, but nominees may be used; we’ll happily act as your nominee when filing the report to enhance your privacy. Using a reputable business formation service can help ensure that the personal information trail ends with the service provider rather than with the state, further protecting your privacy.

If privacy and anonymity are of paramount importance to you, and you don’t want to use a nominee then forming an Anonymous Wyoming LLC as the parent holding company may be a better option.

Corporation For Non-U.S. Person / Non-U.S. Resident / International Entrepreneur / Digital Nomad

You can own a U.S. C-Corporation as a Non-U.S. citizen or a Non-U.S. resident without even setting a foot on U.S. soil.

Generally Non-U.S. citizens and Non-U.S. resident aliens cannot own an S-Corporation neither can become a shareholder.

Wyoming is a popular state for Non-U.S. residents and those living overseas. This is due to the simplicity of forming and maintaining an LLC in Wyoming. There are no state taxes or tax returns to file. You only have to file a federal return, which is the same for all Limited Liability Companies. Everything can be handled online. There is no need to visit neither Wyoming or the U.S.A.

C-Corporations will need to obtain an Employer Identification Number (EIN) from the IRS. We can help you obtaining an EIN for a fee of $150.

In addition, regardless of your income, you will need to file Form 5472 with the IRS to remain in compliance. This is a new requirement and noncompliance can result in significant penalties. It may be advisable to seek the advice of a tax professional or legal advisor to understand any potential tax consequences and to ensure compliance with all applicable laws and regulations.

Non-U.S. Foreign Company Becoming A Shareholder Of A U.S. Corporation

If you own a foreign, non-U.S. company in your home country, it is possible for your company to become a shareholder of a U.S. C-Corporation instead of you personally. There are no specific restrictions on the type of foreign, non-U.S. company that can join a U.S. Corporation. However, the foreign company may need to meet certain legal and regulatory requirements to do business in the United States and become a member of the C-Corporation. This may include obtaining a tax identification number from the Internal Revenue Service (IRS) and registering with the appropriate state agency, as well as complying with U.S. immigration laws if the company plans to send employees to work in the U.S.

If you are looking to form a Holding Company in the U.S. then a Wyoming C-Corp may be your best option. Please click here to find out more.

As an International business owner you have other options to consider as well. Please click here to read our International Company Doing Business In The U.S. post for more information.

common vs preferred stock

When investing in a corporation, most people receive common stock, which represents an ownership stake in the company. This type of share entitles the holder to a share of the profits, known as dividends, after the corporation has satisfied its obligations to creditors and holders of preferred stock. In addition to being entitled to dividends, common shareholders also have voting rights, which allow them to have a say in the management and policies of the corporation. It’s important to note that the rights of common and preferred shareholders are subordinate to the rights of the corporation’s creditors.

There are several differences between preferred and common stock, including voting rights, dividend rights, liquidation rights, call or put rights, and conversion rights.

Voting rights refer to the ability of a stockholder to participate in the election of directors and other matters that the corporation may face in the future. Preferred stock generally does not come with a voting right for general corporate matters, but may have a vote on whether and in what manner to liquidate the corporation.

Dividend rights refer to the payment of dividends to stockholders. Preferred stock generally carries a mandatory dividend that must be paid before common shareholders may receive anything from the corporation. If a preferred dividend is missed, the corporation must make the dividend up before any money is paid to common shareholders. The dividend is usually based on the “par value” per share, which exposes preferred shareholders to an interest rate risk.

Liquidation rights refer to the order in which shareholders receive their share of the corporation’s assets when it is dissolved. Preferred shares generally have the right to receive the par value per share on the liquidation of a corporation before common shareholders receive anything.

Call or put rights refer to the ability of the corporation to redeem or buy back preferred shares for their par value, or for the holder of the preferred shares to sell them back to the corporation for their par value.

Conversion rights refer to the ability of preferred shares to be converted into common shares based on the par value per preferred share and the price of the common share for conversion purposes. This allows a preferred shareholder to time the purchase of common shares when it is economically most beneficial while also receiving a preferred dividend during the holding period.

Par Vs No-Par

Par-value stock is a type of stock that has a minimum value per share assigned to it by the issuer.

In contrast, no-par stock is a type of stock that does not have a designated minimum value.

It’s important to note that the par or no-par value of a stock has no bearing on its value in the market.

The par value of preferred stock is typically used to calculate dividends, determine the call or redemption price, and establish the liquidation amount. When an investor buys preferred stock, the par value is usually the amount per share received by the issuing company. For common stock with a par value, there is no connection between the price paid for the stock and its par value.

Before no-par statutes were enacted, corporations were required by state law to assign a par value to their stock. To minimize the value, they often chose a very low value, such as 1/100th of a cent. The low par value of a share of stock represents a binding agreement between the company and the shareholder.

WE HAVE Answers

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When choosing a name for a business in the United States, it is important to consider a few key factors including availability, distinctiveness, legality and branding.

If you are setting up a Limited Liability Company (LLC) or a Corporation, you will also need to include a designator (suffix) in your business name, such as “LLC” or “INC.” This will help to differentiate your business from other types of legal entities.

Please click here to find out more.

It is not easy to determine which type of business entity, an LLC or corporation, is best for you as it depends on multiple factors such as your business goals, the nature of your business, and your individual circumstances.

If you are a U.S. person / U.S. resident please click here to find out more.

If you are a non-U.S. person / non-U.S. resident please click here to find out more.

Wyoming is a leading incorporation domicile due to low fees, no taxes, simple filing and maintenance requirements along with allowing anonymous LLCs and corporations.

For more information please click here.

If you are a U.S. resident not living in Delaware or Wyoming, the best state to form your business depends on various factors. Typically, it’s advantageous for a U.S. citizen or permanent resident to form the business entity in their home state. However, for most businesses forming a company in Wyoming is also a great choice.

If privacy and anonymity are important to you, forming a Holding Company in a state like Wyoming may be a better choice. Holding Companies can choose their domicile as they are only considered as transacting business if they engage in activities beyond holding assets and leasing them.

For further information, click here.

Common choices for a holding company (a.k.a parent company) are Wyoming, Nevada, Delaware and New Mexico. Wyoming is currently the leading state to form a Holding Company (LLC or Corporation) due to the specific statutes, anonymity, asset protection and comparatively low fees.

Please click here to find out more.

In order to incorporate in Wyoming, you need to have a company name, business address, registered agent, share count, par value, and incorporator. These are the only requirements by law to establish a corporation.

For more information please click here.

Yes, as a non-U.S. person / Non-U.S. resident / International Entrepreneur / International Founder / Digital Nomad you can form an LLC or C-Corp in the United States. In fact, it is not even necessary to physically visit the U.S.A, as it is possible to set up your LLC or C-Corp online.

Please click here to find out more.

You don’t need an SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) to get an Employer Identification Number (EIN) from the IRS. An Employer Identification Number (EIN), also known as a Federal Tax Identification Number or a Federal Business Tax ID, is used to identify a business entity not an individual. You only need an SSN (or ITIN) if you want to apply for an EIN online with the IRS.

We have business formation packages for Non-U.S. owner(s) that includes EIN application for a discounted fee of $150. You can also hire us to obtain your EIN from the IRS for a fee of $175.

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) for individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs.

The first step is to get an EIN from the IRS. You cannot open up a U.S. bank account without an EIN for your LLC or Corporation.

The easiest option is to opening up a business bank account online with a Fintech company like Mercury, Novel etc.

Another solution is to visit the United States yourself.

For other options and more information to open up a U.S. business bank account please click here.

Wyoming is a leading incorporation provider with low fees and no corporate income taxes. Delaware is generally only used by those raising venture capital or looking to go public.

For more information please click here.

How Triple B Business can help in starting your new company?

The fastest, easiest way to start your new company? Hire us and get everything you need: registered agent service, privacy, free mail forwarding, and the guidance of local experts.

We currently offer Business Formation Services only in the States of Wyoming and Delaware because these two great states offer multitude of advantages to new small business owners.

Here’s how you can start the process with Triple B Business today in 3 easy steps:


Tell Us Your Business Name

If you have already decided your new business name then simply enter it on our form. We will perform a free name search for you with the state.


Answer A Few Questions.

Answer a few questions and enter the required information on our business formation form. If we have any questions then we will get back to you.


We Will File Your Paperwork

We will complete your paperwork and be off to the races filing your new company with the state.

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