Selecting the type of corporation for your business is a major decision. There are many different types of corporations to choose from. Each of these forms is associated with various filing requirements, tax consequences, and liability implications. Some common choices of corporations for businesses include:
- Professional Corporations: This is a corporation comprised of many different licensed professionals practicing in a given field such as law, architecture, medicine, etc.
- C or S Corporatioins: These are standard corporation forms. "C" corporations mean that the taxes are processed mostly through the corporation; "S" corporations indicate that the shareholders are more directly involved in tax issues.
- Close Corporations: This is where ownership and control of the corporation is held by a very small number of individuals.
- Non-Profit Corporations: Many groups choose this type of corporation if they are engaged in charitable activities.
- Thus, the type of corporation you select may affect the different advantages and disadvantages available to your company. This is especially true with regards to corporate tax laws.
Some states have laws that are more favorable to corporations than the laws of other states. These states are often called "corporate haven" states. An example of such as state is that of Delaware. For instance, corporations that file for registration in the state of Delaware may experience differences in the way that they are taxed.
Thus, a company that is filed in the state of Delaware is known as a "Delaware corporation." Delaware corporations don’t need to restrict their activities only to the state of Delaware. They may conduct their business elsewhere, but can still reap the benefits of being incorporated in the state of Delaware.
No- some business owners may find that the incorporation process is too cumbersome for their company. This is especially true for smaller businesses. For instance, a smaller organization may choose to register as a partnership rather than a corporation. This can allow the organization to begin operations more quickly than if they had registered as a corporation.
It may be necessary to hire a business lawyer if you need assistance for any legal issues involved with incorporation. Your attorney can provide you with legal advice and guidance on how to file for incorporation. Also, your lawyer can provide you with advice on the different types of corporations. If you have any legal disputes or contests, your lawyer can provide you with representation if you need to file a lawsuit.