There are several types of business incorporation, so it can be difficult to remember what each are and what they do; especially if you do not have a business background. But this list will help you tell apart the different types of business incorporation. Here are the 4 different types of business incorporation.
- LLC: A limited liability corporation is usually the first step after a sole proprietorship. It is usually perfect for a company with a single owner, and makes financial troubles, like bankruptcy, not directly harm their wallets. It also has a pass-through income tax like a corporation. There is no limit to size, however, and an LLC may become a massive company.
- S-Corporation: An S-corporation is a corporation that is usually, but not always, larger than an LLC. It does taxes at a shareholder level, rather than at the corporate level. It is limited to 100 shareholders, S-corporations may not be the end-goal for a company.
- C-Corporation: The largest companies out there tend to be C-corporations. These are the companies you will see traded on the stock market. This company will be taxed separately from the shareholders. It can also have an unlimited number of shareholders, so it can become very large.
- Non-Profit: This type of business can vary greatly in size. A non-profit corporation means that the company does not make profits, but instead uses its excess revenue to invest back into the company (it is not able to give it to shareholders). These are usually companies with the goal of helping, rather than categorized by size.
Business incorporation can get complex, especially at the tax level, but this was a simple look at the 4 primary types of business incorporation.
