The most common of all corporate structures is the General Corporation.
The General Corporation, like all other corporations, is a separate
legal entity that is owned by stockholders (shareholders, i.e. investors).
A General Corporation may have an unlimited number of stockholders.
Due to the legal nature of the corporation, stockholders are protected,
personally, up to the amount of their investment, from the creditors
of the corporation.
assets are protected from business debt and liability
is perpetual (life extending beyond the illness
or death of the owners)
travel, and retirement plan deductions are TAX
ownership of the corporation is easily transferable
will not affect current management
capital through the sale of stocks and bonds is simplified
Expensive to form than proprietorship or partnerships
abide by state and federal rules and regulations
A Close Corporation has a few minor differences as compared to General
Corporations. In most states where they are recognized, Close Corporations
are restricted as to the number of shareholders, usually between 30
- 50. The shares of stock upon sale are to be offered to existing shareholders
first. Generally a Close Corporation is particularly suited for the
entrepreneur looking to run a "one-person" corporation or for a small
group of individuals who will all actively participate in the operation
of the business.
SUB CHAPTER S CORPORATION:
S Corporations have the same basic advantages of General
or Close Corporations with a major distinction of tax liability. Where
as the previous corporation file and pay federal taxes on profits of
the corporation, the Sub-S Corporation eliminates Federal Corporate
Income Tax. The IRS allows all profits to "pass through" all profits
to the shareholders personal tax return.
Sub Chapter S Corp. Restrictions
Can only be a domestic corporation
one class of stock is permitted
than 75 stock shareholders
individuals can be stockholders
stockholder must be a citizen of the US
Note: 95% of all corporations our company helps file are Sub Chapter
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