Deciding if You Should Make a Corporation

Posted by Samantha Miller on Jul 20, 2012 11:29:00 AM

Last week, we did a brief overview of the characteristics of a Limited Liability Company. This week, we’ll outline some of the key characteristics of “Corporations” – another type of entity that may be best for your business.

A Corporation can be defined as an artificial entity created under and governed by the laws of the state of incorporation. Similar to an LLC, you must file the appropriate documents with the state in order to have your Corporation legally recognized.

90138204If the following traits sound pertinent to your business, you may want to consider forming a Corporation as opposed to an LLC…

  1. Corporations issue stock. Stock can be used to raise capital (operating funds) to run or expand your business.
  2. Corporations are owned via shares of stock.
  3. When maintaining a Corporation, you’re required to hold an annual meeting of shareholders and directors. During these meetings, you must keep written minutes, or notes.
  4. The profits of the General Corporation (which are distributed to the shareholders of the corporation as a dividend) are taxed at the corporate rate. The dividend is subject to personal income taxes.

These characteristics describe the general functionality of a Corporation, but it is best to fully research and understand your options before deciding which entity type is best for your business. While Corporations are one of the more common business entity types, there are a few other types that you may want to consider.

Along with our Answer Desk, there are many great resources for you to utilize while researching your development options. Entrepreneur Magazine provides a great overview of business structures and is a consistent resource for industry updates.

After you’ve reviewed your options, you may be ready to form your corporation online. If you’d like to receive information on doing so, or if you’re ready to incorporate, visit our Quick Quote section to get started!

What resources have you found helpful when developing your business or corporation? 

Topics: Tips & Tricks, Corporation Creation