Corporation Formation
Incorporating provides legal protection, tax perks, and room to grow. Explore key corporation types and their benefits.
C Corporation
A C Corporation is a standard corporation structure that is separate from its owners and offers strong liability protection. This is the most common type of corporation and is well-suited for businesses seeking outside investment, such as venture capital.
Separate legal entity from owners
Owners (shareholders) are not personally liable for corporate debts
Potential for unlimited growth with multiple classes of stock
Subject to double taxation (corporate income and shareholder dividends)
S Corporation
An S Corporation allows businesses to enjoy the legal benefits of a corporation while being taxed similarly to a partnership or LLC. This structure is ideal for small businesses looking to avoid double taxation.
Pass-through taxation (avoiding corporate income tax)
Limited liability protection for owners
Appointing a registered agent
Shareholders are limited to 100 and must be U.S. citizens or residents
Profits and losses flow directly to the shareholders' personal tax returns
Nonprofit Corporation
A Nonprofit Corporation is formed for purposes other than generating profits for its owners. It is often used by charitable organizations, educational institutions, and other entities that aim to serve the public good.
Eligible for 501(c)(3) Tax-Exempt Status
Profits reinvested in the mission
Overseen by members or a board
Must follow nonprofit laws
Professional Corporation
A Professional Corporation (PC) is a special form of corporation available to professionals such as doctors, lawyers, accountants, and architects. It allows them to benefit from the protections of a corporation while adhering to specific regulatory requirements for their professions.
Liability limited to business debts only.
Only licensed professionals can be shareholders.
Must meet industry
standards.
Usually no personal liability, except in some cases.
Professional Corporation
Liability limited to business debts only.
Only licensed professionals can be shareholders.
A Professional Corporation (PC) is a special form of corporation available to professionals such as doctors, lawyers, accountants, and architects. It allows them to benefit from the protections of a corporation while adhering to specific regulatory requirements for their professions.
Must meet industry
standards.
Usually no personal liability, except in some cases.
C Corporation
A standard corporation subject to corporate income tax.
S Corporation
A corporation that passes income, losses, and deductions to shareholders for tax purposes
Nonprofit Corporation
A corporation designed for charitable, educational, or public-benefit purposes.
Professional Corporation
A corporation for licensed professionals such as doctors, attorneys, or accountants.
Frequently Asked Questions
What is corporation formation?
Corporation formation is the process of legally establishing a corporation, including registering with the appropriate government authorities, filing necessary documents, and complying with all legal requirements to operate as a corporate entity.
Why should I form a corporation?
Forming a corporation provides several benefits, such as limited liability protection for owners, tax advantages, and a professional structure that can help attract investors or partners. It also allows your business to have a distinct legal identity.
How do I know which type of corporation to form?
The most common types of corporations are C-Corporations and S-Corporations. The choice depends on factors such as tax preferences, ownership structure, and business goals. We provide expert advice to help you choose the best option for your needs.
What documents are required for corporation formation?
The primary documents include Articles of Incorporation, Corporate Bylaws, and other state-specific forms. Additionally, you’ll need to appoint directors and officers and obtain an Employer Identification Number (EIN).
Can I form a corporation in a state different from where I operate?
Yes, many businesses choose to incorporate in states with favorable laws or tax benefits, such as Delaware or Nevada. However, you may still need to register to do business in the state where you operate.
Get in touch
Book your free 30 Consultation
BizStartup.com is not a law firm or accounting firm and does not offer legal, tax, investment, or accounting advice. If you require legal, accounting, investment, or tax advice, please seek the services of an appropriate professional such as an attorney, accountant, and or financial advisor.
Services
Our Address
16501 Ventura Blvd.,
Encino, California 91436
Toll free: (800) 989-9555
Office: (818) 373-0022