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Home | Business Formations | Incorporation

Incorporation

1.	Definition of a Corporation
2.	Reasons to Form a Corporation
3.	Two Types of Corporations
4.	Tax Advantages of Corporations
5.	Comparing Corporations to Sole Proprietorships and Partnerships
6.	Differences Between a Corporation and a Limited Liability Company (LLC)
7.	Forming a Corporation
8.	Choosing a State for Incorporation
9.	Foreign Corporations
10.	Managing a Corporation
11.	Appointing Officers in a Corporation
12.	Owners of a Corporation
13.	Corporate Stock
14.	Shareholders and Directors for a Corporation
15.	Required Officers for a Corporation
16.	Operating a Corporation
17.	Definition of an S Corporation
18.	How Corporations are Taxed
19.	Checklist for New Corporations
20.	State Procedures for Forming a Corporation

3. Two Types of Corporations

The IRS allows for a corporation to be taxed either as a “C corporation” or as an “S corporation.”

C Corporations

A C corporation is taxed at two levels. This is commonly referred to as double taxation. A C corporation pays a corporate tax on its corporate income (the first tax). Then, the C corporation distributes profits to stockholders who pay income tax on those dividends (the second tax).

S Corporations

One way to avoid the double taxation of a C corporation is to make a special election to be taxed as a S corporation, which is pass-through entity taxed like a partnership or a sole proprietorship. That way, there is only one level of taxation. The corporate profits "pass through" to the owners, who pay taxes on the profits at their individual tax rates.

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