There are many different types of corporations. Depending on the nature of the business, a company may choose one type of corporate form over others. The different types of corporations exist in order to address various needs of businesses, and to make it easier for them to accomplish specific business goals. Some different types of corporations include:
- Close Corporation: This is where the majority of the company’s stock is held by only a few shareholders. Often utilized by family businesses.
- Foreign Corporation: This is a corporation that is registered in one state, but operates in one or more different states. Many businesses do this in order to take advantage of more favorable filing options that exist in certain states such as Delaware and Nevada.
- Non-Profit: Non-profit corporations engage mostly in charitable projects and activities.
- Controlled Corporation: A controlled corporation is where most of the stock is owned only by one firm or one individual.
- Private and Public Corporations: Private corporations are businesses formed for non-public intentions, such as religious organizations or various industry-centered corporations (like banking corporations). Public corporations are owned by the government.
- Professional Corporations: These are corporations consisting of licensed professionals from a given field who band together in order to pool their resources and talents.
- S Corporations: In an S corporation, the stockholders pay taxes directly. This can result in different tax results. This is in contrast to the more standard C Corporation, in which the corporation handles its own tax matters.
There are many other types of corporations; these are just a few of the main types of corporate forms that are commonly chosen.
There are several advantages to incorporation, including:
- The company becomes its own, valid, legal entity, and can operate as such (signing documents, filing papers, etc.).
- Shareholders are generally insulated from liability; it is the corporation that is typically held liable for violations or losses.
- Some corporate structures such as non-profit corporations are granted various tax benefits
- Public consumers often associate incorporated businesses with trustworthiness and reliability.
On the other hand, there can be a few setbacks and disadvantages regarding the corporation process. One of these is that the process can often be complicated and lengthy. Some smaller businesses may wish to choose a simpler business structure like a partnership or a sole proprietorship.
Filing for incorporation can sometimes be a complicated process. You want to make sure that you’re choosing the right type of corporation for your company’s goals. It’s in your best interests to hire a qualified business law attorney if you need assistance with any filing or incorporation matters. Your lawyer can help you review all the different options that are available. Also, in the event of a dispute or a legal conflict, your attorney can help you file a lawsuit if needed.