The Formation Of A Corporation

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The formation of a business is generally influenced by motive or strategy that best suits the business owners. There are four types of business entities that exist and each having different tax implications. These entities include sole proprietorships, C- Corporations (C-Corps), S-Corporations (S-Corps), and Partnerships. This paper will focus on the advantages and disadvantages of C-Corporations and S-Corps and deciding which one makes more sense than the other.
Formation of a Corporation
A corporation is formed under the laws of the state in which the corporation is registered ( Corporations can either be a C-Corp or an S-Corp; in which both have owner shareholders. Forming a corporation requires establishing and registering your business with your state government and filing documents named Articles of Incorporation. These documents are filed with your Secretary of State in order to provide information to the state about your business and are also made available to the public ( Generally, corporations provide limited liability for all owners (Sumutka, 2009). A C-Corporations is an independent legal entity that is owned by one or more shareholders and governed by subchapter C of the Internal Revenue Code. C-Corps, not shareholders, are held liable for any actions or debt incurred ( Shareholders exchange money, property or both for stock in the C-Corp. A C-Corp is recognized as a separate entity for federal income tax purposes and is

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