S Corp vs C Corp. Form the Right Corporation for Your Business
There are two types of corporation entities that focus on profit: C-Corp and an S-Corp. We will cover the key differences between them and recommend the top online filing services to incorporate in less then 10 minutes.
What is a corporation?
There are two types of corporations: C-Corporation (C Corp) and an S-Corporation (S Corp). We’ll discuss each of these in a minute, but first let’s outline the characteristics of corporations in general. Forming a corporation shields your personal assets from business liabilities as there is a complete separation between the two finances. It is allowable in all 50 states. There are international corporations as well with their own set of rules.
Corporations are owned by a group on individuals who work together to generate a profit. Each owner controls a percentage of the corporation based on the number of shares they own. If you intend on growing and adding outside investors, you need to form a corporation. There is great deal of paperwork required to incorporate, but the advantages as far as taxes, protection and growth opportunities may be worth it.
C-Corporation
C-Corporation is great for businesses that sell products, have a storefront or have employees. If you ever want to go public in the future, this is the entity you should choose in order to have unlimited shareholders. Tax implications are key in choosing this entity. Businesses must pay a corporate income tax, and dividends are distributed at the individual level. Owners pay personal income tax on profits and healthcare premiums for your employees can be written off.
S-Corporation
S-Corporations are generally designed for smaller business entities. It works very similar to an LLC in protecting your personal assets, but you are able to pay yourself a salary from the company.
To clarify, an S corporation is not a business entity, it’s a tax classification. Owners pay personal income tax on the profits and business income and loss is passed to the owners on tax returns. There can be no more than 100 shareholders so the entity will stay on the smaller side and have different management structure than a C-Corporation. Shareholders must also be US citizens or resident aliens.
Why use online business formation services to incorporate?
Online business formation service providers offer a fast and cost-effective solution to forming a business. These filing services and industry experts offer all the services you would need to start and run your business, such as preparation and filing of LLCs and corporations, business licenses, legal documents, compliance, and registered agent services, all in one place for an affordable price.
With online business formation service providers, forming your business is a quick, straightforward, and smooth process. All you need to do to get started is select one of the top business formation services above which will take you to their website. Then pick the business entity you are interested in, whether it be an LLC, s-corporation, or c-corporation, and enter the state you wish to register your business in. You will then be prompted to enter your desired business name, select the type of business package you want to proceed with and you’re all set.
Incorporating a business is no longer a complicated, lengthy, and expensive process when you leave it to these industry professionals to do the work for you.
Top corporation filing services
1. SwyftFilings
The best all-round corporation filing service
Pros & Cons
You can register your corporation with SwyftFIling in less than 10 minutes. The standard package includes everything you need to launch your business including: Verify Company Name Availability, Preparation of Articles of Organization, Document Filing with Secretary of State, Online Access to Your Incorporation Documents, Lifetime Customer Support (Phone & Email), Free 30 Minute Business Tax Consultation, ComplianceGuard™ Company Alerts, Free Domain Name, Custom LLC Operating Agreement, Custom LLC Banking Resolution and more.
2. Incfile
Award-winning corporation formation service
Pros & Cons
You can register your corporation using IncFile filing service for free (+State fees). TThe free package will not cover all the essentials for your business, but it includes; Preparing & Filing of the Articles of Organization, Unlimited Name Searches and FREE Registered Agent Service for a year.