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| What are the different types of corporations? |
The corporation is a legal entity that exists separately from its owners. It is created when properly completed articles of incorporation (called a charter or certificate of incorporation in some states) are filed with the Secretary of State, and all fees are paid. A corporation can own property, enter into contracts, and conduct business under its own name.
There are a number of different types of corporations, each with its own benefits and liabilities. Choosing the correct type is a key step in the incorporating process. There are sole proprietorships, C Corporations, an S-Corporations, Limited Liability Companies (LLCs), and Non-Profit Companies. Below are descriptions of each type of corporation, with links to the individual corporation order forms.
"C" Corporation
The term "C" Corporation stands for the way in which your corporation will be taxed by the IRS. There is a corporate income tax on the profits of a "C" Corporation. And, in addition, if a dividend is paid to the stockholders from the corporation's retained earnings, the dividend must be included on the stockholders personal tax return. Therefore, the profits of a "C" corporation are subject to possible double taxation. The corporation you form will be taxed as a "C" Corporation this year unless you file IRS form 2553 to elect tax status as an "S" Corporation. Click for order form.
"S" Corporation
The term "S" Corporation stands for the way in which your corporation will be taxed by the IRS. There is no corporate income tax on profits; instead the annual profit of an "S" Corporation is included on the personal return of each stockholder. IRS form 2553 must be filed within 75 days of incorporation to be treated as an "S" Corporation for tax purposes. This form is provided in your corporate outfit which is supplied with every HUBCO corporation order. Click for order form.
Non-Profit Corporation
A non-profit corporation is one that is formed pursuant to a different state law than a standard for-profit corporation. The corporation must be formed for some religious, charitable, educational, literary or scientific purpose. It is not designed to generate a profit for its shareholders. Nonprofit corporations can apply for tax-exempt status at both the federal and state level. Click for order form.
Limited Liability Company (LLC)
The LLC is not a partnership or a corporation. It is a distinct business entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation. Click for order form.
If you have any questions, please call as us 1-800-443-8177. As always, however, we must remind you that HUBCO Inc. cannot provide legal advice, so regarding specific legal-related questions, please contact an attorney or accountant. |
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