Incorporate your business
Incorporating your business is one of the best ways you can protect your personal assets. A corporation can own property, carry on business, incur liabilities, and sue or be sued. As a separate legal entity, a corporation is responsible for its own debts.
How it works
Answer a few simple questions about your company.
Answer a few simple questions about your company.
C-Corporation
S-Corporation
Generally
The label, “C-Corporation” merely refers to a regular, state-formed corporation. To be formed, an Incorporator must file Articles of Incorporation and pay the requisite state fees and prepaid taxes with the appropriate state agency (usually, the Secretary of State).
Separate Legal and Tax Life
A corporation which is properly formed and operated as a corporation assumes a separate legal and tax life distinct from its shareholders. A corporation pays taxes at its own corporate income tax rates and files its own corporate tax forms each year (IRS Form 1120).
Management and Control in Corporation
Normally, a corporation’s management and control is vested in the board of directors who are elected by the shareholders of the corporation. Directors generally make policy and major decisions regarding the corporation but do not individually represent the corporation in dealing with third persons. Rather, dealings with third persons are conducted through officers and employees of the corporation to whom authority is delegated by the directors of the corporation.
Shareholders
Shareholders are the owners of a corporation
Board of Directors
The Board of Directors is responsible for the Management and policy decisions of the corporation. There are, however, a few instances when the shareholders are required to approve of the Actions of the Board of Directors (e.g. amendment to the Articles of incorporation, sale of substantially all of the corporate assets, the merger or dissolution of the corporation, etc…).
Board of Directors
The Board of Directors is responsible for the Management and policy decisions of the corporation. There are, however, a few instances when the shareholders are required to approve of the Actions of the Board of Directors (e.g. amendment to the Articles of incorporation, sale of substantially all of the corporate assets, the merger or dissolution of the corporation, etc…).
Corporate Officers
Corporate officers are elected by the Board of Directors and are responsible for conducting the day-to-day operational activities of the corporation. Corporate officers usually consist of the following: (President, Vice-President, Secretary, Treasurer)
Number of Persons Required
In most states, one or more persons may form and operate a corporation. Some states, however, require that the number of persons required to manage a corporation be at least equal to the number of owners. For example, if there are two shareholders, there must also be a minimum of two directors.
Fringe Benefits
Corporate Formalities
Shareholder Liability for Corporate Debts
Avoiding Double Taxation
S- Corporation Election
Duration of a Corporation
Constitutional Protections for Corporations
Right to Due Process and Equal Protection
Freedom of Speech
Right to Counsel
No Privilege Against Self-incrimination
Corporations have no privilege against self-incrimination (e.g. to prevent disclosure of incriminating corporate records).
What is an S-Corporation
An S Corporation begins its existence as a general, for-profit corporation upon filing the Articles of Incorporation at the state level. A general for-profit corporation (also known as a ‘C corporation’) is required to pay income tax on taxable income generated by the corporation.
However, after the corporation has been formed, it may elect “S Corporation Status” by submitting IRS form 2553 to the Internal Revenue Service (in some cases a state filing is required as well). Once this filing is complete, the corporation is taxed like a partnership or sole proprietorship rather than as a separate entity. Thus, the income is “passed-through” to the shareholders for purposes of computing tax liability. Therefore, a shareholder’s individual tax returns will report the income or loss generated by an S corporation.
Qualifying for S Corporation Status
To qualify as an S corporation, a corporation must timely file IRS Form 2553 with the IRS. This election must be made by March 15 if the corporation is a Calendar year taxpayer in order for the election to take effect for the current tax year. However, a “New” corporation may make the filing at anytime during its tax year so long as the filing is made no later than 75 days after the corporation has began conducting business as a corporation, acquired assets, or has issued stock to shareholders (whichever is earlier).
To qualify for S corporation status, the corporation must be a U.S. corporation with only one class of stock. In addition, the corporation cannot have more than 75 shareholders. Further, shareholders must be individuals, estates or certain qualified trusts, who consent in writing to the S corporation election. No shareholder can be non-resident alien
Corporate Formalities
IRS Filing
The S-Corporation must complete and file IRS Form 1120s to report its annual income to the IRS each year.
General Shareholder Requirements
Only One Class of Stock
Who Should Elect S-Corporation Status
What is an S-Corporation
An S Corporation begins its existence as a general, for-profit corporation upon filing the Articles of Incorporation at the state level. A general for-profit corporation (also known as a ‘C corporation’) is required to pay income tax on taxable income generated by the corporation.
However, after the corporation has been formed, it may elect “S Corporation Status” by submitting IRS form 2553 to the Internal Revenue Service (in some cases a state filing is required as well). Once this filing is complete, the corporation is taxed like a partnership or sole proprietorship rather than as a separate entity. Thus, the income is “passed-through” to the shareholders for purposes of computing tax liability. Therefore, a shareholder’s individual tax returns will report the income or loss generated by an S corporation.
Qualifying for S Corporation Status
To qualify as an S corporation, a corporation must timely file IRS Form 2553 with the IRS. This election must be made by March 15 if the corporation is a Calendar year taxpayer in order for the election to take effect for the current tax year. However, a “New” corporation may make the filing at anytime during its tax year so long as the filing is made no later than 75 days after the corporation has began conducting business as a corporation, acquired assets, or has issued stock to shareholders (whichever is earlier).
To qualify for S corporation status, the corporation must be a U.S. corporation with only one class of stock. In addition, the corporation cannot have more than 75 shareholders. Further, shareholders must be individuals, estates or certain qualified trusts, who consent in writing to the S corporation election. No shareholder can be non-resident alien
Corporate Formalities
IRS Filing
The S-Corporation must complete and file IRS Form 1120s to report its annual income to the IRS each year.
General Shareholder Requirements
Only One Class of Stock
Who Should Elect S-Corporation Status
C-Corporation
Generally
The label, “C-Corporation” merely refers to a regular, state-formed corporation. To be formed, an Incorporator must file Articles of Incorporation and pay the requisite state fees and prepaid taxes with the appropriate state agency (usually, the Secretary of State).
Separate Legal and Tax Life
A corporation which is properly formed and operated as a corporation assumes a separate legal and tax life distinct from its shareholders. A corporation pays taxes at its own corporate income tax rates and files its own corporate tax forms each year (IRS Form 1120).
Management and Control in Corporation
Normally, a corporation’s management and control is vested in the board of directors who are elected by the shareholders of the corporation. Directors generally make policy and major decisions regarding the corporation but do not individually represent the corporation in dealing with third persons. Rather, dealings with third persons are conducted through officers and employees of the corporation to whom authority is delegated by the directors of the corporation.
Shareholders
Shareholders are the owners of a corporation
Board of Directors
The Board of Directors is responsible for the Management and policy decisions of the corporation. There are, however, a few instances when the shareholders are required to approve of the Actions of the Board of Directors (e.g. amendment to the Articles of incorporation, sale of substantially all of the corporate assets, the merger or dissolution of the corporation, etc…).
Board of Directors
The Board of Directors is responsible for the Management and policy decisions of the corporation. There are, however, a few instances when the shareholders are required to approve of the Actions of the Board of Directors (e.g. amendment to the Articles of incorporation, sale of substantially all of the corporate assets, the merger or dissolution of the corporation, etc…).
Corporate Officers
Corporate officers are elected by the Board of Directors and are responsible for conducting the day-to-day operational activities of the corporation. Corporate officers usually consist of the following: (President, Vice-President, Secretary, Treasurer)
Number of Persons Required
In most states, one or more persons may form and operate a corporation. Some states, however, require that the number of persons required to manage a corporation be at least equal to the number of owners. For example, if there are two shareholders, there must also be a minimum of two directors.
Fringe Benefits
Corporate Formalities
Shareholder Liability for Corporate Debts
Avoiding Double Taxation
S- Corporation Election
Duration of a Corporation
Constitutional Protections for Corporations
Right to Due Process and Equal Protection
Freedom of Speech
Right to Counsel
No Privilege Against Self-incrimination
Corporations have no privilege against self-incrimination (e.g. to prevent disclosure of incriminating corporate records).
S-Corporation

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