There has been a lot of articles written touting Nevada "C" corporations. But for those new to asset protection, they may be unfamiliar with what a "C" corporation actually is. So, here are the basics regarding "C" Corporation.

Essentially, a "C-Corporation" designation refers to a standard, general-for-profit, state-formed corporation. In order to form the corporation, it's required that an Incorporator file the Articles of Incorporation and pay the requisite state fees and prepaid taxes with the appropriate state agency. Once a corporation is properly formed and operating as a corporation it then assumes a separate legal and tax life distinct from its shareholders. A corporation pays taxes at the corporate income tax rates as well as filing its own corporate tax forms each year.

Management and control of a corporation is, in most cases, vested in the Board of Directors. The directors are elected by the actual owners of the corporations, who are known as shareholders. The Directors make policy and major decisions with regards to the corporation. However, they do not individually represent the corporation in dealing with third parties. Instead, any dealings with third parties are conducted by officers and employees of the corporation whose authority has been delegated by the directors of the corporation.

The Board of Directors is responsible for the management and policy decisions of the corporation. There are, however, some instances where shareholders are required to approve of the actions of the Board of Directors. These actions may include amendments to the the Articles of incorporation, the sale of corporate assets, the merging or dissolution of the corporation, etc...

Corporate officers are elected by the Board of Directors. The responsibility of these officers is the conducting of the corporation's day-to-day operational activities. In most case, corporate officers consist of a President, Vice-President, Secretary and Treasurer.

In most States, one or more persons may form and operate a corporation. However, other States require that the number of people necessary to manage a corporation should at least be equal to the number of owners. So, for example, if there are two shareholders, there must also be a minimum of two directors.

In order to retain the corporate existence and thus the benefits of limited liability and special tax treatment, the inviduals who run the corporation must observe corporate formalities. This means that even a one-person corporation, depending on the occasion, will have to wear different hats. For example, one person may be responsible for being sole shareholder, Director, and Officer of the corporation; however, depending on the action taken, that same person will have to observe certain formalities, such as holding annual meetings, taking minutes of the meetings, appointing officers, and issuing shares to shareholders. Most importantly, the corporation should issue stock to its shareholders as well as keeping adequate capital on hand to cover any "foreseeable" business debts.

Where corporate formalities are not observed, then the shareholders may find themselves to be held personally liable for corporate debts. What this entails is that if a thinly capitalized corporation is created, funds are commensurate with employees and officers, no stock is issued, no meetings are held, or other corporate formalities required by the state of incorporation are not followed, a court or the IRS may "pierce the corporate veil," thereby holding the shareholders personally liable for corporate debts.

Generally, the corporation is taxed for its own profits; then, any profits paid out in the form of dividends are taxed once again to the recipient as dividend income and the individual shareholder's tax rate. However, most small corporations rarely pay dividends. Instead, owner-employees are paid salaries and fringe benefits which are deductible to the corporation. The result is that only the employee-owners will end up paying any income taxes on this business income and double taxation rarely occurs.

As a separate legal entity, a corporation is able to continue indefinitely. The corporation's existence is not affected by death or incapacity of its shareholders, officers, or directors or by transfer of its shares from one person to another.

A corporation is not a "citizen" under the privileges and immunities clause of the Fourteenth Amendment to the U.S. Constitution. However, a corporation may exercise a few of the constitutional protections granted to U.S. citizens. These protections include:

* Right to Due Process and Equal Protection: Corporations enjoy the right to equal protection and due process of law guaranteed under both the Fourteenth and Fifth Amendments to the U.S. Constitution.
* Freedom of Speech: Lacking some narrowly drawn restrictions serving compelling state interests, corporations have the right to express themselves on matters of public importance regardless of whether or not those issues "materially affect" corporate business.
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Right to Counsel: A corporation cannot be imprisoned. However, a criminal action can result in fines and other penalties that could harm the corporation’s shareholders, officers, and other persons. Therefore, a corporate criminal defendant has a Sixth Amendment Right to Counsel. However, it should be noted that because a corporation faces no risk of incarceration, it does not have the right to have counsel appointed if it cannot afford to retain private counsel.

An exception to the rights of corporations under the laws is that corporations have no privilege against self-incrimination in order to prevent disclosure of incriminating corporate records).

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