The Corporation (C Corp) is an entity that handles the responsibilities of the business. A corporate structure is more complex than other business structures. It requires complying with more regulations and tax requirements and usually requires more tax preparation services then either a sole proprietorship or partnership.
To form a corporation in the Commonwealth of Virginia, Articles of Incorporation must be filed with the State Corporation Commission and fees must be paid to register the corporation as well as for the amount of stock that will be issued. A foreign corporation, one formed under the laws of another state or foreign country must also obtain a certificate or authority to operate before it may legally conduct business in the Commonwealth. There also is a requirement to file annually with the Commission and failure to do so in a timely manner could result in the suspension or revocation of the corporation’s charter.
When a corporation is formed, a separate tax-paying entity is formed as well. Unlike sole proprietors and partnerships, income earned by the corporation is taxed at the corporate level using corporate tax rates. Regular corporations are called “C” corporations because Subchapter “C” of Chapter 1 of the IRS Code is where you find general tax rules affecting corporations and their shareholders.