Starting a Small Business – What is a Corporation?

Corporations are separate legal entities that must File Articles of Incorporation with the State.  Owners have limited personal liability for any debts, obligations or claims the business incurs equal to the invested amount.  There are two types of corporations: S and C.  S corps allow profits to be taxed at the individual owner level but must meet certain ownership requirements (less than 75 owners all of which must be U.S. citizens).  C corps have no ownership limitations but are double taxed i.e. profits are taxed at the corporate level and, if distributed, taxed at the individual level as well.

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