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There are several types of corporation filings available, both internationally and in the United States (US). In the US, corporations may be filed as a C Corporation, S Corporation, limited liability company (LLC), or non-profit corporation. Corporations in Great Britain are similarly formed as legal entities with limited liability and will often be designated with "Ltd" in the name.
C Corporations are the most traditional of corporation filings in the US. Stocks are issued to the corporation owners who are called stockholders or shareholders. Shareholders elect board members to set policy. The board members appoint or hire officers to carry on the day-to-day business. Shareholders participate in the profit of the business but are limited in loss to what they have invested.
Major advantages of the C Corporation include its ability to act as a legal entity, unlimited life, and limited liability. Corporation filings for these types of companies establish legal entities with rights and responsibilities similar to citizens. They can continue to exist even when one or more of the owners no longer own stock. Shareholders are liable only for the amount of money they invested and cannot be sued or required to meet the debts or liabilities of the company.
Although these types of corporation filings produce companies that typically are less risky and can raise capital easier than a single person, there is the disadvantage of double taxation. First, taxes are paid at the corporate level. Then, individuals who have stock are also taxed on their share of dividends or capital gain.
Corporation filings also include the S Corporation. This has many of the same advantages as the C Corporation but is not taxed at the corporate level. S Corporations are known as pass-through entities because the profit is passed through to the shareholders for taxation. Shareholders must pay on their portion of the profit, however, even if the profit is not distributed to them. There also are certain limitations or regulation on who may be a shareholder of S Corporations.
In the US, a limited liability company is a type of business that has characteristics of both a corporation and either a partnership or sole proprietorship. An LLC with two or more members may choose to be taxed as either a corporation or as a partnership. If the LLC has only one member, he or she can choose to be viewed by taxing authorities either as a corporation or as a disregarded entity that is not separate from the owner.
Companies that are not in business to make a profit can file as a non-profit corporation. In the US, these types of corporations must file for tax exempt status on the federal level. If tax exempt status is granted, the donations given to the company will be tax deductible for the donors.
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