How To Decide Which Corporation To File Your New Business

August 16, 2019

If you’re setting your new business up as a corporation, it’s important to pick a type and pick it wisely. It’s also vital you know how different corporate classifications work, because most corporations can be described with more than one of the labels in discussion. Encino tax advisors will be able to provide you with more information about the terms used to describe types of corporations, including the core differences in taxation between corporation types.

Tax Designations for Corporations

The two corporation types explicitly discussed as for-profit businesses in the tax code are S corporations and C corporations. There are other business types for tax purposes, but they are not considered corporations, which are distinct legal entities. These tax designations determine how taxes are paid and by whom, and they are important, but there are other important considerations, too. There are also designations for non-profit corporations of various types.

Structural Designations for Corporations

Structural definitions for corporations determine whether there is a board with formal meetings, how stock ownership is determined and transferred, stock voting rights, and other important procedural determinations about company governance. Each corporation type has limitations on its policies and structural positions, so it’s important to get the advice of Encino tax consultants before filing your official paperwork of incorporation.

• Statutory close corporations
• Quasi-closed corporations
• Professional corporations
• Regular corporations

If you’re unsure how your choice of S vs. C corporation types for taxation will affect your finances, Los Angeles tax preparation services will be able to give you advice. You can also learn more about how any of the structural corporation types interact with those tax choices, so you’re better prepared to meet all your obligations after you decide what kind of corporation your new business will be. The sooner you get help from professionals, the sooner you can make an informed decision about the future of your company.