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 or rather the amount of their shares.
  • Shareholders appoint the Board of Directors.
  • The Board of Directors hire C-suite executives to run the day-to-day operations of the corporation.
  • In a corporation with a small number of shareholders, they fullfill all of the roles.

Closely Held Corporation

  • A corporation can also be known as a “closely held corporation.”
  • There 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.
  • Can only have one hundred (100) shareholders
  • Must be U.S. Citizens or Resident Aliens to be a shareholder.

Professional Corporation

  • A professional corporation (PC) is owned by shareholders who are members of a profession (e.g., 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 designated “non-profit” by the Internal Revenue Service.
  • Tax-exempt
  • Must meet stringent IRS reporting requirements

NOTICE: The information on this website does not constitute legal advice and you should not rely on any information without seeking the advice of a competent attorney licensed to practice in your jurisdiction. This web site is both a communication and/or solicitation as defined by California Rules of Professional Conduct, rule 1-400. For further information, please click here.


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