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Helping Clients Incorporate Their Businesses Quickly and Easily
At some point during business operations, many owners realize that incorporating the company makes sense. However, this technical part of business law requires excellent legal counsel and representation from skilled business lawyers. At Fisher Stone, P.C., we are ready to help you prepare for corporate governance through adequate business formation processes.
You can count on our experienced team of attorneys for advice and when you need to take action. Call 516-908-9519 to speak with our talented New York City legal team.
What Is the Difference Between a C-Corporation and an S-Corporation?
The first step in determining which entity fits your business is understanding how each entity works and how it affects your business ownership. Some of the most common forms of corporations are the C-corp and the S-corp.
C-Corporation
Some key aspects of a C-corp include:
- Taxed on business and personal levels
- Taxed as a business, and shareholders are taxed on any profit they receive through dividends
- Option to go public and issue shares
- Freedom in issuing shares to investors and choosing to be publicly traded
S-Corporation
S-corps include some of the following as identifying factors:
- Allows pass-through taxation
- Have a tax designation that allows all taxes to be passed through to the shareholders
- Have ownership and stock restrictions
- Can’t be publicly traded
- Are also limited in the type of stock they can issue and who can own an S-Corp
What Are Some Frequently Asked Questions Regarding Business Formation?
What is a Corporation?
A Corporation is a business entity, like an LLC, but with a different structure and growth options for larger companies. Standard Corporations are also known as C-corporations and are taxed on the business and personal levels. The preferred entity for investors, Corporations can issue shares and have the option to be publicly traded.
What is an S-Corporation?
An S-corporation is a Corporation that opts for an S-election, meaning that the business will not be taxed, and profits will be passed through to the shareholders. S-corporations operate like a C-corporation but can’t be owned by other Corporations, LLCs, or trusts. Another important note is that S-corporations also have restrictions when it comes to issuing stock.
How do Corporations Work?
Corporations can operate in any way the shareholders choose. Ultimately, the shareholders choose a board of directors, who then choose corporate officers. From there, the Corporation would act as any business would, but with greater freedom in raising funding and distributing shares.
What is the Benefit of a Corporation Over an LLC?
The benefit of a Corporation is the growth potential, which comes forth in multiple ways. Corporations are the preferred business type for investors and have the option to be publicly traded. Corporations also have the benefit of a set structure, with a clear set of rules and standards for the board of directors and corporate officers.
What Are the Main Types of Business Entities?
Choosing the right business structure is critical in starting or managing your business. Each type of entity has unique features, protections, and drawbacks. Explore your options below to find the structure that best fits your needs.
Limited Liability Company (LLC)
Features:
- Flexible management and structure.
- Can have unlimited members.
- Ownership options include other LLCs, corporations, or legal entities.
Protections & Taxes:
- Shields personal assets from business liabilities.
- Provides pass-through taxation for owners.
- Requires separate tax filings.
Negatives:
- Requires regular fees and filings to maintain.
- Cannot go public.
- Not recognized internationally.
S-Corporation (S-Corp)
Features:
- Allows issuance of shares (common stock only).
- Shareholders must be U.S. residents.
Protections & Taxes:
- Shields personal assets from business liabilities.
- Provides pass-through taxation for owners.
- Requires separate tax filings.
Negatives:
- Requires regular fees and filings to maintain.
- Requires a formal structure, including a board of directors.
- Must maintain records and hold annual meetings.
C-Corporation (C-Corp)
Features:
- Best option for businesses planning to go public.
- Owners can issue both common and preferred stock.
Protections & Taxes:
- Shields personal assets from business liabilities.
- Subject to corporate and personal-level taxation.
- Requires separate tax filings.
Negatives:
- Requires regular fees and filings to maintain.
- Must have a formal structure, including a board of directors.
- Requires record-keeping and annual meetings.
Sole Proprietorship
Features:
- No setup fees or formal requirements.
- Owned by a single individual.
- Licenses or permits may be required, depending on state regulations.
Protections & Taxes:
- No personal liability protection.
- Taxed only at the personal level.
- No separate tax filing is required.
Negatives:
- No liability protection for personal assets.
- Lacks company structure or organizing documents.
- Limited business rights.
Should You Hire Our Business Incorporation Attorneys in NYC?
Our skilled business lawyers have years of experience helping with various aspects of business formation. We craft unique operating agreements for limited liability companies, construct asset purchase agreements, help small businesses raise capital, and assist with strategic planning. Call 516-908-9519 now for your free consultation!