Corporations

There are several types of corporations to choose from. The choice depends on your goals, structure, and your industry requirements.

Corporation

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

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