Which Incorporation is right for me?

Answer:
There are several different types of incorporation,

including (1) General Corporation, (2) Close Corporation, (3) Limited Liability Corporation (LLC), and (4) S Corporation. There are advantages and disadvantages associated with each type of corporate structure, and choosing the best type for your business is a function of many different factors. It is in your best interest to consult an accountant or tax attorney before making a final decision about the structure of your business.

The most common type of corporate structure is the General Corporation. General corporations may have an unlimited number of stockholders, so this structure is ideal for publicly traded businesses and others that plan to issue stock to a number of stockholders. However, this format is the most heavily regulated and formal type of incorporation. Close Corporations are very similar to General Corporations, except there cannot be more than 50 stockholders.

S Corporations are similar to General and Close Corporations, with an additional benefit in terms of how profits are taxed. Income and losses for S corporations are reported on the personal tax returns of the owners of the corporation. This means that corporate profits are taxed only at the individual level. With the other forms of incorporation, profits are reported on both the corporate tax returns and the tax returns of the owners.

Limited Liability Corporations are actually not corporations, so there is no stock. These organizations also have a limited life. In many states they cannot exceed 30 years in duration. They are basically partnerships that do offer owners protection from being held personally liable for the debts of their businesses.


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