A board of directors often oversees operations, giving approval to management team decisions and directing them as needed. C-Corporations are separate entities with legal and financial responsibilities separate from those of the owners or shareholders. Owners or shareholders are exempt from legal responsibility for the debts and obligations of the corporation, unless they decide to personally guarantee financial or other arrangements. The dividends are reported as personal income and taxed again. Filing articles of incorporation with the secretary of state creates a C-corporation.
Businesses can incorporate in other states.
For example, companies often incorporate in Delaware because of tax advantages and corporation laws that favor management, Holthouse said. But businesses incorporated in other states still must file a notice with the California secretary of state and follow the same state rules, and reporting, tax and operating procedures.