If your business is high-risk, needs to raise funds or plans to “go public” it may make sense to incorporate. However, those in Staten Island looking to incorporate may have options on what type of corporate structure to choose. The following is a brief overview of several types of corporate structures.
A corporation, generally referred to as a C corp, is a separate legal entity from those who own it. This means the C corp can make a profit, is subject to taxes and can be held liable in court, all separate from its owners. This protection makes C corps an attractive option for those wishing to incorporate. However, the cost to establish a C corp is greater than other possible business structures. C corps also have record-keeping, operational processes and reporting requirements. In addition, C corps are subject to double taxation — once on the profits made, and again on dividends paid.
An S corporation, generally referred to as an S corp, is a type of corporation that is not subject to double taxation like a C corp is. Profits and losses of the corporation are passed directly to the owners’ personal income, and thus do not face corporate taxes. S corps have to register both with the state and the Internal Revenue Service. S corps are limited to 100 shareholders, all of who must be citizens of the United States. Like C corps, S corps are subject to filing and operational processes requirements.
A B corporation, generally referred to as a B corp, is taxed in the same matter as a C corp. However, the B corp is obligated to shareholders to provide some type of public benefit, along with financial profits. In some states, B corps have to submit a benefit report each year showing how they contributed to the public good.
Learn more about corporations
These are only some examples of corporations that may be an option for your business. This post does not contain legal advice. Those who want to learn more about business and commercial law can visit our firm’s website for further information.