Corporation Types

Types of corporations we can form for you

Corp1 is a document filing and registered agent service, and we are not attorneys or accountants. We cannot give you legal advice as to which entity type you should form. Feel free to use this information to help guide you. You should always ask your accountant or attorney which business entity is best suited for your particular needs.

Corporation

Beginning	File a certificate of incorporation
Ownership	No limit on amount of shareholders
Managed by	Shareholders, Officers & Directors
Tax Structure	Income and shareholder dividends are both taxed as they are earned
Stock	No limitations on amount of stock that can be authorized
Limits Personal Liability	Yes, limited to the amount invested by the shareholder
Can Be Owned by other Companies or Non-US Citizens	Yes
Annual Requirements	Most states require filing an annual report &/or paying an annual franchise tax
Advantages	structure limits each owner’s (shareholder's) personal liability for the corporation’s business debts to the amount invested in the company by the shareholder.
Disadvantages	Double Taxation of revenue & stringent record-keeping requirements

S Corporation

Beginning	File a certificate of incorporation & file Sub-Chapter S election form with IRS within 75 days of forming the new entity
Ownership	Maximum of 100 Shareholders
Managed by	Shareholders, Officers & Directors
Tax Structure	Allows income to pass-through the entity to the shareholder's personal tax return thereby only being taxed once
Stock	Limited to one class of stock and can never go public
Limits Personal Liability	Yes
Annual Requirements	Most states require filing an annual report &/or paying an annual fanchise tax
Advantages	Provides flexibility to set salaries for employee/owners to minimize Social Security and Medicare taxes
Disadvantages	Cannot be owned by other companies or non-US citizens, cannot go public

Limited Liability Company (LLC)

Beginning	File Certificate of Formation (also called Articles of Organization) with State and draft internal Operating Agreement.
Ownership	Unlimited Members
Management Structure	Managed by LLC Members
Tax Structure	Allows income to pass-through the entity to the shareholder's personal tax return thereby only being taxed once"Pass-Through" (Generally earnings are taxed once at the member level)
Stock	Unlimited Membership Interests
Limits Personal Liability	Yes
Can be Owned by other Companies or Non-US Citizens	Yes
Annual Requirements	Most states require filing an annual report &/or paying an annual LLC tax
Advantages	LLCs enjoy much greater flexibility in that they are not required to maintain the detailed record keeping that corporations need to maintain the liability protection.
Disadvantages	slightly more costly to maintain in most states

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