For this reason, they have become one of the most popular types of businesses. Another advantage is that corporations can raise additional funding by selling shares. Corporations also enjoy tax advantages that are not often offered to sole proprietorships and partnership structures. It is possible for a self-employed person to register as a corporation. In fact, it might even be advantageous to do because of the following benefits:.
The taxes on a corporation may be as low as percent lower when compared to a sole proprietorship structure. This is one of the most common reasons for registering as a nonprofit corporation structure. If you need help with the number of owners in corporation, you can post your legal need on UpCounsel's marketplace.
UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. It is fairly easy to set up but the intricacies involved in managing the business and complying with regulatory and tax rules can be daunting for a small business owner.
One of the benefits of setting up a business as a corporation, however, is the ease of determining who owns and controls the corporation. A corporation is formed under the laws of the state where its articles of incorporation are filed.
State corporation laws determine who owns a corporation. In all states, the ownership of a corporate entity is vested in shares of stock. The number of shares a corporation initially authorizes is detailed in the articles of incorporation. Once a corporation is formed by filing articles of incorporation, the people or entities involved who will own the company are issued shares of stock in exchange for their capital contributions, such as contributions of cash or services.
The corporation is not required to issue all of the shares that were authorized in the articles of incorporation. However, the holders of shares of stock in the corporation are its owners, and their ownership percentage is determined by the percentage of shares they hold of the total number of shares that have been actually issued by the corporation, called outstanding shares.
Traditionally, corporations issued a tangible stock certificate for every share of stock. Stock certificates are still in use, but many small corporations do not bother to issue stock certificates to shareholders. Opting not to issue stock certificates does not change the nature of corporation ownership under the law.
A Subchapter S corporation functions much like a partnership. A limited liability company combines elements of both a partnership and a corporation. An LLC, therefore, offers limited liability for the owners yet provides the operational and tax flexibility of a partnership. When the LLC is created, a time limit is established for the duration of the company.
This limit can be extended upon agreement of the members. In order to be taxed as a partnership rather than a corporation, an LLC must have no more than 2 of the following 4 characteristics of regular corporations:. For further information and support in determining your business structure and obtaining a business name and license, be sure to contact one or more of the BOS partners below -— each has information and resources that can assist you in these business basics:. By the Web Design Company.
Skip to content. Select Language English Spanish Vietnamese. Toggle navigation. Business Structures Structure a Business. Structure a Business Businesses can be organized a number of different ways.
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