Ready to Form Your Corporation?

A corporation is a state-chartered legal entity that exists separately from its owners, offering shareholders limited liability for its debts and obligations. A board of directors and officers governs it under formal bylaws, and it can raise capital by issuing stock. While C corporations face “double taxation” (profits taxed at both the corporate and shareholder levels), S corporations and nonprofits may elect pass-through or tax-exempt status.

• Capital Raising & Investor Appeal: Corporations can issue multiple classes of stock and go public, making attracting venture capital and institutional investors easier than an LLC’s membership interests.

• Equity-Based Employee Compensation: Offering stock options or restricted stock units is straightforward in a corporate structure, helping recruit and retain top talent, whereas LLCs require more complex “profits-interest” plans.

• Perpetual Existence & Transferability: Corporations continue regardless of ownership changes and allow shares to be freely transferred. An LLC membership can terminate on an owner’s exit or death and often requires other members’ consent.

An S corporation and a C corporation both offer limited liability protection and formal corporate governance, but they differ primarily in taxation and ownership rules.

• Tax Treatment: C corps face “double taxation” (corporate profits are taxed at the entity level and dividends are taxed at the shareholder level), whereas S corps enjoy pass-through taxation (profits and losses are reported directly on owners’ personal returns).

• Shareholder Limits: C corps can have unlimited and foreign or institutional shareholders across multiple stock classes, and S corps are limited to 100 U.S.-resident individual shareholders and only one class of stock.

• Capital Structure Flexibility: C corps can issue preferred shares and multiple classes, making them ideal for raising large amounts of capital, while S corps have stricter share rules, better suited for smaller businesses seeking tax simplicity.

Starting a corporation establishes a separate legal entity that shields your personal assets from business liabilities, much like an LLC, but with additional capacity for issuing shares, formal governance, and capital raising. While LLCs offer liability protection with simpler pass-through taxation and fewer formalities, corporations enable multiple classes of stock, structured board oversight, and the potential for “going public.”

• Protect Personal Wealth: Creditors generally cannot pursue your home or savings for corporate debts.

• Access to Capital: Issue shares or debt instruments to attract investors and fuel growth.

• Perpetual Existence: The corporation continues regardless of ownership changes or founders’ departure.

• Enhanced Credibility: A corporate structure signals stability and professionalism to customers, partners, and lenders.

• Flexible Ownership Transfers: Shares can be bought, sold, or inherited without disrupting company operations.