Corporation
Congratulations on deciding to start your own business and become your own boss! I'm here to help you along the way. Let's first start by choosing the right entity.
Why start a corporation
Attract investors
Raise funds by appealing to investors who may prefer corporations for their ability to offer stock.
Entice employees
Win over—and keep—top talent by giving them shares.
Look more official
Corporations have more clout—which can make it easier to do business with other companies.
Two paths you can take
Majority business owners choose to be an S corporation, but don't feel like any decision is final.
You can always convert to a C corporation later.
S corporation
Only shareholders pay taxes on profits received.
Limited to 100 shareholders who must be U.S. citizens or residents.
Owners can only get common stock which comes with voting rights.
C corporation
The business pays taxes at the corporate level, and shareholders pay taxes on income received.
No limits on how many people and who can own shares.
Owners may get preferred stock—which comes with no voting rights but priority to dividends before common shareholders.