What Type of Corporation Is Best?

I want to incorporate my new business. What kind of corporation is best?

There are two basic types of corporations: S corporations and C corporations (excluding corporations formed by nonprofit companies, which are known as 501(c)(3) corporations, named after the IRS code

that addresses them). The problem with a C corporation is that it is taxed twice: once when the business makes a profit and then a second time when those profits are distributed to shareholders. S corporations avoid this by passing all tax liabilities on to shareholders. As such, S corporations are only taxed once.

So which is best for you? That depends on what type of business you're starting. If you plan on creating a large company (one that is publicly traded), choose a C corporation because shares of its stock are most easily transferred. While you might want an S corporation for tax reasons, they are limited to no more than 75 shareholders, all of whom must be individuals.