Advantages to Forming a Corporation (Inc)

By default a corporation is taxed separately from its shareholders. Therefore your corporation has a separate tax return than your personal tax return or the tax return of other shareholders.

It is possible to have one tax return filed, you must file for an S-Corporation through the IRS once your corporation is approved, this allows pass through taxation similar to that of an LLC. 

Therefore when you choose to open a corporation it is good to know that you can be taxed either way, given you meet the requirements of an S-Corp.

There must be less than 100 shareholders, the corporation must be domestic, the shareholders must be US citizens or resident aliens, the company only has one class of stock and all shareholders must agree to the S status. If you're unsure whether you qualify or want an S-Corp it's important to speak to a professional before you file.

A corporation can be owned by one or more people. Owners of a corporation own shares of stock, which in turns owns the corporation, this makes transferring of ownership relatively simple. Someone can own shares of stock in a corporation but not be a director, who ultimately makes the decisions in a corporation. Anyone can own shares of stock in a corporation, but there are additional stipulations for shareholders of S-Corporations. We recommend you speak with an accountant to see what type of entity is best for you.

To transfer ownership of a corporation you simply need to transfer the shares of stock. Be sure to document all the changes of ownership on a stock ledger. Keeping accurate records will help in case there is ever a suit brought against a corporation.

A corporation is required to distribute based on ownership percentages. The person with the most interest in the company is distributed more than one with very little interest. This is important to those owning shares of stock because in some business structures income is distributed evenly.

Corporations are managed by directors, though corporations are required to have annual meeting with shareholders so they can voice their opinions in the corporations activities also.

A corporation’s life is not based on the life of the shareholders, because shares can easily be transferred  they can also be handed down when a shareholder passes away, therefore the corporation can be perpetual. As long as a corporation is in compliance with the state and has directors and shareholders the corporation is considered active.