Types of Corporations:

• General Corporation
• Close Corporation
• S Corporation
• Limited Liability Company (LLC)

General Corporation:

• Owners' personal assets are protected from business debt and liability
• Corporations have unlimited life extending beyond the illness or death of the owners
• Tax free benefits such as insurance, travel, and retirement plan deductions
• Transfer of ownership facilitated by sale of stock
• Change of ownership need not affect management
• Easier to raise capital through sale of stocks and bonds

• More expensive to form than proprietorship or partnerships
• More legal formality
• More state and federal rules and regulations

Close Corporation

• Limited to 30 to 50 stockholders
• Directors must first offer the shares to existing stockholders before selling to new shareholders

S Corporation

• All income or loss is reported only once on the personal tax returns of the shareholders
• Shareholders are exempt from personal liability for business debt
• Maximum number of shareholders is 75
• May be held by a new "electing small business trust."
• Allowed to own 80 percent or more of the stock of a regular C corporation
• allowed to own a "qualified subchapter S subsidiary." The parent S Corporation must own 100 percent of the stock of the subsidiary
• Shareholders must be citizens or residents of the United States. Nonresident aliens cannot be shareholders
• S Corporations may only issue one class of stock
• No more than 25 percent of the gross corporate income may be derived from passive income.
• Can generally provide employee benefits and deferred compensation plans

• A financial institution that is a bank;
• An insurance company taxed under Subchapter L;
• A Domestic International Sales Corporation (DISC);
• Certain affiliated groups of corporations.
• Limited Liability Company (LLC)

• Protection of personal assets from business debt
• Profits/losses pass through to personal income tax returns of the owners
• Great flexibility in management and organization of the business
• LLCs do not have the ownership restrictions of S Corporations making them ideal business structures for foreign investors

• Limited life (not to exceed 30 years in many states)
• Do not have stock -- and the benefits of stock ownership and sales.

This is a highly technical subject and if you require further information, it is recommended that you communicate with the Internal Revenue Service, and consult competent professionals such as a qualified tax accountant and an attorney. To read more about this subject CLICK HERE.