Types of Corporations
The three main types of corporations include the C Corporation, S Corporation, and LLC. A C Corporation is taxed separately from its owners. S Corporations consist of up to 100 shareholders and profits and losses are shouldered by the shareholders. Non-Profit Corporations operate without generating profits.
Publicly Held Corporations consist of unlimited shareholders, making them ideal for large businesses. Owners of an S Corporation receive profits and losses on personal tax returns, while Charitable and religious organizations often use Non-Profit Corporations.
Corporation Structure
A corporation’s structure has three main groups: directors, officers, and shareholders. Shareholders own the corporation, the board of directors controls the corporation to protect shareholders’ interests, and officers handle daily operations.
Liability and Taxation
Corporations have rights and liabilities distinct from their owners. Common corporation types reduce liability for business owners. In a C Corporation, shareholders receive profits and pay taxes, as does the corporation as a separate entity. S Corporation owners receive profits and losses to report on personal tax returns, while Non-Profits and religious groups incorporate to limit liability.