Corp types

• Reasons for choosing a C-Corporation:

  • Best if the company plans to someday sell stock to the public; can issue shares to founders, employees, and investors
  • Unlimited owners (aka "shareholders") allowed
  • Shareholders are not personally responsible for business liabilities
  • Taxed twice-business pays at the corporate level, and shareholders pay on income received. A separate tax return is required for the business
• S-Corporation:

  • Offers many of the same benefits as a C Corporation, but better for smaller businesses
  • 100 shareholders maximum allowed. All must be U.S. citizens or residents
  • Shareholders are not personally responsible for business liabilities
  • Taxed once-only the shareholders pay on profits received. A separate tax return is required for the business
• Sole Proprietorship:

  • Best if you need an easy set-up. You may still need a DBA or business licenses to operate legally, but no other paperwork is required
  • One owner maximum
  • The owner is personally responsible for business liabilities. No personal liability protection
  • Taxed once you pay on profits in your personal tax return. Separate tax return not needed
• Limited Liability Company (LLC):

  • Popular choice for business concerned about liability protection
  • Unlimited owners (aka "members") allowed. No shareholders. LLCs cannot go public
  • Members are not personally responsible for business liabilities
  • An LLC can choose how to be taxed by filing form 8832 with the IRS. An LLC can elect to be taxed as a Sole Proprietorship, Partnership, S Corp, or C Corp. An LLC is not recognized globally; you may be taxed as a corporation in other countries