Types of Corporations

General Corporation
A general corporation is a body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members. This structure is most suitable to the corporation that plans to have more than 30 shareholders, and plans to make large public stock offerings.

Non-Profit Corporation
The non-profit corporation is best suited for businesses planning to engage in charitable, religious, educational or scientific activities deemed socially beneficial. Net income of non-profit corporations must be applied to the attainment of the not-for-profit purpose and not to enrich the individual members, officers or directors. Most non-profit corporations achieve 501 (C) (3) status, or tax-exempt status, by filing the Application for Recognition of Exemption with the IRS.

A C corporation (or C corp.) is a corporation in the United States that, for Federal income tax purposes, is taxed under 26 U.S.C. 11 and Subchapter C (26 U.S.C. 301 et seq.) of Chapter 1 of the Internal Revenue Code. Most major companies (and many smaller companies) are treated as C corporations for Federal income tax purposes. This type of corporation is particularly well suited to the entrepreneur who wants to be a one-person corporation, or a small group of individuals who will all participate in running the business. In most states, where close corporations are recognized, a C-Corp is limited to 30 stockholders, and stock may have to be first offered to existing shareholders.

S Corporation
An S corporation or S-corp, for United States federal income tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. Many business owners find the S Corporation especially attractive in that all earnings or losses are passed through directly to their personal income tax return. As a result, an S Corporation avoids the double taxation feature of general business and close corporations. Certain requirements must be met before qualifying for S Corporation status, and we recommend that you consult with your tax advisor first. To obtain an S corporation tax status, the corporation must have all shareholders sign IRS form 2553 within 75 days of the date of incorporation. CHS can assist you with these filings.

Limited Liability Company
This type of business entity has recently emerged as a superior alternative to corporations and partnerships. The Limited Liability Company (LLC) combines the best features of corporations and partnerships: the corporate advantage of limited personal liability and the taxation advantage of partnerships. The LLC is now recognized in most states and is a highly flexible business entity created in response to the demand for a better alternative to traditional forms of business.