A business corporation is an entity created by the person or persons who organize it. This legal entity may own property, enter into contracts, sue and be sued. Because it is a person, it is subject to taxation. It’s owners, called shareholders, also pay tax on certain distributions made to them, such as cash dividends. This is often referred to as double taxation. Shareholders are protected from liability and their loss is limited to the amount of money they invest in the corporation. Although the shareholders own the corporation, the corporation is managed by its board of directors. The directors typically appoints officers to carry out the directors’ policies and goals for the corporation. A corporation is subject to regulatory control by the state in which it is formed as well as any other state in which it does business.

 

 

S Corporation

C Corporation

Certain small business corporations that adhere to specific requirements of the IRS Code are provided relief against double taxation, typically common to business corporations.   S corps allow profits, and some losses, to be passed thoroughly directly to owners’ personal income without ever being subject to corporate tax rates.   The corporation itself does not pay tax and all income earned is passed through the corporation to the shareholders.   All shareholders (who must not number more than 100) must agree to the election of “S status”and must file with the IRS to get S corp status.   All shareholders must be U.S Citizens.   S corps have completely independent life separate from its shareholders. If a shareholder leaves the company or sells his or her shares, the corporation can continue doing business relatively undisturbed.   S corps can be a good choice for a business that would otherwise be a C corpo but meet the criteria to file as an S corp.

A typical (standard) business corporation is referred to as a C corporation under IRS rules. It’s a legal entity that’s separate from its owners. Corporations can make profit, be taxed, and can be held legally liable.   They offer the strongest protection to its owners from personal liability, but the cost to form is higher than other structures. They also require more extensive record-keeping, operational process, and reporting.   Pay income tax on their profits and sometimes taxed twice- first, when the company makes a profit, and again when dividends are paid to shareholders on their personal tax returns.   C Corps have completely independent life separate from its shareholders. If a shareholder leaves the company or sells his or her shares, the corporation can continue doing business relatively undisturbed.   An advantage when it comes to raising capital because they can raise funds through the sale of stock, which can also benefit in attracting employees.   C corporation can be a good choice for medium-or higher risk businesses that need to raise money, and businesses that plan to go public or eventually be sold.

 

 

Bundle		Standard $249 + State fees (CA: $115.00)
Entity Name Availability Check We’ll perform the search to see if your proposed name is allowed and available.		X
Entity Name Reservation Calendar expiration of name for 60 days		X
Prepare Articles of Incorporation or sometimes called a Certificate of Formation		X
Filing Complete documentation and file it with the state		X