What is a corporation?
A corporation is a more complex business structure generally. It is a legal entity separate from its owners, called shareholders, who own shares of stock in the company. For “regular” or C corporations (often used for large and publicly traded companies), profits are taxed both at the corporate level and again when distributed to shareholders. This is the tax disadvantage which is avoided by the “pass through” entities such as LLCs and S corporations.
A corporation is a nonhuman entity. No, it is not like ET, the ExtraTerrestrial, and it is not created by God or Mother Nature. Instead, corporations exist because of a statute known as the Business Corporation Act (BCA). The most important feature of a corporation is that it exists entirely separate and apart from its owners. Virtually all the legal and tax advantages associated with corporations flow from this essential element. Corporations must have at least one owner, but there is no upper limit. The owners are called shareholders or stockholders. The ownership interests of the shareholders in a corporation are divided into units called stock, shares, or shares of stock. The rules governing corporations along with the advantages and disadvantages apply equally to corporations owned by one or more than one shareholder. A corporation comes into existence when the prospective shareholders file a paper with the Illinois Secretary of State known as Articles of Incorporation. Among othe
A corporation is a legal entity that exists separately from its owners. Creation of a corporation occurs when properly completed articles of incorporation are filed with the correct state authority, and all fees are paid. What is the difference between an “S” corporation and a “C” corporation? All corporations start as “C” corporations and are required to pay income tax on taxable income generated by the corporation. A C corporation becomes a S corporation by completing and filing federal form 2553 with the IRS. An S corporation’s net income or loss is “passed-through” to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations. Sub-chapter S corporations, as they are also called, are restricted to having fewer than 100 shareholders, who must be individuals (S Corps cannot be owned by other corps) who are not nonresident aliens. Do I need an attorney to incorporate? No! Having
