Corporations

What is a corporation Form of business ownership Considered a separate legal entity that is separate from the people who own and manage the business Viewed as a legal “person” for the purposes of taxes, contracts, lawsuits, etc.

3 Types of Corporations C Corporation S Corporation Limited Liability Corporation

C Corporation (aka C Corp) Owned by shareholders No restrictions in who can be shareholder Must elect a board of directors to make decisions and set policies Business does not end when owners (shareholders) change or die Limited Liability Owners not responsible for company debts and can not be sued for corporate offenses Double Taxation Profits taxed at corporate level and dividends paid to shareholders are taxed

S Corporation (aka S Corp) Similar to a C Corporation with a few main differences. May have no more than 100 shareholders Shareholders can not be non resident aliens or other businesses Limited Liability Profits are passed through to shareholders; no double taxation Shareholders must include income on their personal tax returns even if the money is not actually distributed

Limited Liability Corporation (aka LLC) Combines features of corporation and partnerships Owners are called members No restrictions on number of members in most states Profits are passed through to shareholders; no double taxation Not recognized by federal government and must file taxes as either a corporation, partnership, or sole proprietorship Limited liability