If you are a small business owner and run it with a few other people, you may want to think about incorporating your business. If you do that, you can protections for yourself, your business, and any partners you may have. If you do decide that you want to incorporate, there are several different kinds corporations that you can choose from. You will need to consult a business attorney before you incorporate, so they can help you figure out which one works best for your business.
A corporation is a business that is owned by its shareholders. In general, there are open corporations and close corporations. A close corporation is one where the stock is held by a small group of people, such as a family or a partnership. A person who holds shares in a close corporation may have to offer to sell their shares to other members before they can sell them out to someone else. If you go with a close corporation, you may have a limit as to how many people you can have as shareholders. An open, or general, corporation has many more shareholders. In general, their shares are held publicly, which means that anyone who wants shares in the company can buy some. Going with either one of these choices means that your personal assets aren't going to be held liable for any business debts that you may incur.
An LLC, or limited liability corporation, are more of a hybrid of a corporation and a partnership. When you set up an LLC, it gets set up so that you and the other members of the LLC are given freedom from liability from business debts that the company accrues, unless you used personal money to guarantee a business transaction. You can also choose to have your shares of the business's profits be taxed as personal income and at a lower rate than as business profits. LLCs are common for small businesses.
An S corp really isn't a different kind of corporation. Instead, it is a special tax designation that you can apply to the IRS for after you have formed your corporation. An S corporation may also be a good choice for a small business. Part of what makes it good is that you are able to avoid double taxation that may show up if you use different kinds of corporations. You can also get more freedom to set up the wages and salaries for your employees to help minimize their tax liability.
If you are thinking about setting up some kind of corporation out of your small business, you will need to talk to a corporate lawyer and get information as to which would work best for you. To learn more, contact a lawyer that specializes in corporate law like George M Cappello, Lawyer.