There are several types of corporations to choose from. The choice depends on your goals, structure, and your industry requirements.
- A corporation is a separate entity from the shareholders (owners).
- It is formed by filing the Articles of Incorporation with the Secretary of State.
- Shareholders are not personally liable for the debts of the corporation. Their liability is limited to the amount invested in the corporation or rather the amount of their shares.
- Shareholders appoint the Board of Directors
- Closely Held Corporation
- A Corporation can also be known as a “Closely Held Corporation”
- There are a limited number of shareholders (in California it is limited to only 35 shareholders) in a Closely Held Corporation.
- S-Corporation or Subchapter S Corporation
- An S-Corporation is a corporation that is designated a “Small Business Corporation” by the Internal Revenue Service.
- “Pass through” taxation or the shareholders (as opposed to the corporation) are taxed on the profits and losses of the business.
- Professional Corporation
- A professional corporation (P.C.) is owned by shareholders who are members of a profession (i.e. doctors, lawyers, or accountants).
- A PC is only allowed to have one type of share.
- Non-Profit Corporation (501(c)(3))
- A non-profit corporation is a regular corporation that is designated “non-profit” by the Internal Revenue Service.
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