There are four common types of companies: (1) a, C Corporation is the standard (default) corporation under IRS rules. (2) an, S Corporation is a corporation that has special elected tax status with the IRS. Both business structures are given their names from the Internal Revenue Tax Codes. (3) an, Limited Liability Company (LLC) is a form of private limited company. (4) a, Limited Liability Partnership (LLP) is a form of business structure primarily used by licensed professionals. And (5) a, Nonprofit Organization (NPO) commonly used for raising awareness and benefiting society.
C corporation (or, C-Corp) is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity. C corporations, are the most prevalent of corporations, which are also subjected to double corporate income taxation. And are liable for the actions and finances of the business - the shareholders are not. C-Corps may have a threshold of 2000 shareholders, before having to report their earning publicly and to the Security Exchange Commission (SEC) or it can become a publicly traded (IPO) entity with unlimited number of shareholders.
S Corporations (or, S-Corp) are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Subchapter S corporations, which are often (but not always) smaller businesses, owned by individual shareholder. S corporations are taxed by the IRS as pass-through entities, therefore, because of the pass-through taxation, S corporations doesn't pay federal income tax on its business income. An S Corp cannot have more than 100 shareholders, meaning it can't ever go public, which limits its ability to raise capital from new investors.
A Limited Liability Company (LLC) is a form of a private limited company. It is a business structure that can combine the pass-through taxation of the partners or sole proprietorship, with the limited liability of a corporation. An LLC is not a corporation under state law; it is a legal form of a company that offers a limited liability status to its owners in many jurisdictions. LLCs are well known for the flexibility that they provide to business owners, an LLC may elect to be used and taxed like a corporation, instead of being treated as a partnership, and under certain circumstances, LLCs may be organized as not-for-profit entity. Also its impossible for an LLC to do an IPO.
A Limited Liability Partnership (LLP) is a form of business structure that is primarily used by professionals like: attorneys, accountants, physicians, engineers, dentists, and architects. A business must have two partners to form an LLP, and usually, the partners must be licensed in the same profession. A partnership must file an annual information return to report the income, deductions, gains and losses, from its operations, but does not pay income tax. Instead, all profits or losses are passed through its partners.
There are ten (10) out of the fifty (50) states that does not allow or recognize LLPs.
A nonprofit organization (NPO) is a collective that operates for the societal benefit of others; it can be formed as a legal entity in any state jurisdiction. The purpose for these organizations is to receive funds in, and donate it to the further the organization's objectives, while also using some the contributions it receives to keep its operation running.
Nonprofits are subjected to non-distribution constraint, meaning - any revenues that exceeds the organization’s expenses must be committed to other purposes of the collective, not pocketed by the owners.
In order for an entity to become tax-exempt, it must file one of the twenty-seven (27) types of the 501(c) forms with the IRS, when seeking to gain approval to be tax-exempt; and some may also qualify to receive tax-deductible contributions, especially, the 501(c)(3) being the most common. Additionally, an entity may also incorporate as a nonprofit entity without securing tax-exempt status.
A nonprofit organization, may be a business association, churches, political organizations, schools, social clubs, or consumer protection co-ops.
Key aspects of nonprofits are: Accountability, trustworthiness and transparency to its donors, founders, volunteers, program recipients, and the community.
But as time passes and the business evolve, you may find that situations in your business no longer fits the goals and services being offered or perhaps the leadership team has undergone some changes, or the business has relocated to a more suitable location.
Any major event that alters the accuracy of your Articles of Incorporation or Articles of Organization, needs to be updated with the secretary of state by filing an Articles of Amendment.
Let our team take care of filing your Articles of Amendment, so your company remains in compliance.Start your Business