COMMON CORPORATE STRUCTURES

There are several different types of corporate entities. At Corporate Extensions, we can help you understand the advantages of each and help you incorporate no matter which structure you decide is best for you. There are three structures that are widely used: the General Business Corporation, the Subchapter S Corporation and the Limited Liability Company.

-----------------------GENERAL BUSINESS CORPORATION------------------------

This most formal structure is used by both small and large businesses. Limited liability applies to all stockholders and there is no limit on the number of stockholders. The corporation offers perpetual existence and can raise capital by selling stock in public offering and trading stock on public exchanges.

---------------------------SUBCHAPTER S CORPORATION---------------------------

A corporation with Subchapter S status also offers its owners limited liability, but the main advantage here is that the IRS allows any tax obligations on the corporation's income to be "passed through" to the personal income tax of the owners. Thus, the owners are only taxed on one level, rather than on both. Law requires that all S corporations must be domestic and all shareholders must be US citizens.

------------------------LIMITED LIABILITY COMPANY (LLC)------------------------

The LLC is not a corporation, but it offers many of the same advantages. There is limited liability protection and "pass through " taxation for the owners, or members. This is a structure that is particularly suited to family businesses, professional organizations, non-US residents and foreign businesses. Most states require two members to form an LLC and it is not a perpetual structure with a duration limit of 30 years in most cases.

There are alternatives to these widely used business entities, such as the close corporation and the non-profit corporation. If you require more information on these types of structures please call us toll-free at (800) 474-6340. One of our Corporate Specialists will be available to speak with you and answer any questions as you determine which entity is best suited to your purpose. For more information on S corporations and LLCs, go on to our Frequently Asked Questions page.

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