A corporation, sometimes called a C Corp based on the IRS tax code default, is formally known as a General Stock Corporation in Delaware. A Delaware corporation is a legal entity with perpetual existence that has the same rights and responsibilities as an individual but is separate under the law from the shareholders who own it. The shareholders are not personally liable for the debts of the corporation.
A Delaware corporation, same as in other states, has strict formalities governed by the state. Corporate bylaws are required. In accordance with the bylaws, the shareholders elect the board of directors to oversee the corporate activities, and the officers (i.e. President, Secretary, and Treasurer) are responsible for carrying out the day-to-day management of the corporation. Initial and annual meetings must be held, and records must be kept for minutes, resolutions, and other actions. A stock register is necessary to keep a record of the shares issued by a corporation.
Taxes are imposed on the corporation when earned, and then profit is taxed to the shareholders when distributed as dividends, creating a double taxation. The corporation can elect to be taxed as an S Corp by the IRS for pass-through taxation if it is eligible.
While the names of the initial directors of a Delaware corporation do not need to be listed on the Certificate of Incorporation, the names and addresses of all directors must be publicly disclosed in the Annual Franchise Tax Report which also collects certain other basic business information; shareholder information is not collected. The annual franchise tax is assessed based on the number of authorized shares.
Delaware corporations are popular for companies planning to attract investors.
Non-stock corporations and public benefit corporations are also available in Delaware.
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