There are two main types of Corporations. A “C” Corporation is a separate entity from its individual owners. A Corporation provides its shareholders with protection from liability and protection from personal responsibility from contracts, debts and other obligations. Corporate profits are taxed at the corporate level and also taxed to the individual shareholders. A “S” Corporation is much like a “C” Corporation in its protection of shareholders from individual liability. The main difference between an S Corporation and a C Corporation is an S Corporation is exempt from federal income tax. All taxes are paid exclusively by the individual shareholders.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/4″][vc_column_text]
B. Limited Liability Company (LLC)
A Limited Liability Company is a hybrid of a Corporation and a Partnership. In a Limited Liability Company or LLC, individual parties have and control shares, and their liability is usually determined by their investment. Yet, like a Partnership, income tax is not paid at the Corporate or LLC level, but is rather passed through to the shareholder level. An LLC is a rather complicated form of business entity.
C. Professional Limited Liability Company
A Professional Limited Liability Company permits licensed professionals to possess the same advantages inherent in a Limited Liability Company. A Professional Limited Liability Company also has the same disadvantages as a Limited Liability Company. All members of such an entity must be members of the same profession.
D. Corporate Trusts
A Trust is an instrument where a Settlor or the Creator of the Trust, determines a Trustee to manage his or her Assets, to the benefit of a Beneficiary. Upon the Creator’s death, the Assets pass directly to the Beneficiary without the need for Probate or the payment of Estate taxes. In a Corporate Trust, the Creator is also the Beneficiary. Corporate Trusts tend to be used for the business activities of many financial service companies and banks for activities that involve acting in a fiduciary capacity for investors in a particular security.
E. Non-Profit Corporations
A Nonprofit Corporation must be incorporated to serve a charitable, educational, scientific, religious or literary purpose. The nonprofit corporation does not pay income tax on money that it receives for a charitable purpose. Donors’ donations are tax deductible and some benefits may be deducted as business expenses. Any property owned by the Nonprofit Corporation, remains with the Corporation and cannot be transferred to an individual or for profit entity.