Types of Corporations
The C Corporation(C Corp)The C Corporation or C Corp is the regular corporation in Nevada. Normally, you will not see the letter C used, but when it is, the reason is to distinguish it from the S corporation. When you complete the paperwork to form a corporation, you will have formed a C corporation unless you take the extra step to file for Sub Chapter S status with the Internal Revenue Service. A C corporation which is not considered to be in the personal services business may elect to end its tax year on a date other than December 31st. This designation must be made at the time the SS4 form is filed to obtain the corporations EIN number. The S Corporation(S Corp)The S corporation is formed when the extra step is taken to file for Sub Chapter S status with the Internal Revenue Service. The S Corporation provides the liability protection of a C corporation and is taxed as though it were a partnership. The S corporation must maintain proper records and meetings as though it were a C corporation. The Professional Corporation:Nevada recognizes the use of professional corporations. This does not mean that the other types of corporations are not used by professionals or that you aren't professional if you use them. Instead, it is simply a type of corporation that authorizes only members of the designated profession to be shareholders. Doctors, Lawyers, and CPAs are three examples of professionals who frequently use professional corporations. If you are not a licensed professional, you can not own shares in a professional corporation. Thus, an unlicensed individual could not own part of a doctor's practice by simply becoming a shareholder. Professional corporations are taxed like regular corporations. However, unlike a regular corporation, a professional corporation does not protect the shareholder from malpractice claims against the professional or in some cases, others in the corporation. The professional corporation does provide liability protection for shareholders from other actions such as personal injury.
The Limited Liability Company(LLC)A Limited Liability Company or llc, provides the benefits of a regular corporation but with no separate taxation. As of October 1, 1997 Nevada joined with over 40 states to recognize "Single Member LLC's." Virtually all of the 50 States of the Union recognize multi-member LLC's and a growing number are giving this same recognition to the single member variety. This gives the small business person all of the advantages of an LLC even though that individual is the only member. These advantages are: It is a Tax Pass through entity like a partnership or Sub-S corporationIt offers its members all the liability protection of a C-CorporationIts members are State tax free in NevadaUnder the "Check the Box" rules effective January 1, 1997 the taxpayer can elect to have his company taxed as a corporation or partnership. All 50 states recognize LLC's and 40 of them recognize single member LLC's - This means that the tax advantages of Nevada will be recognized in your home state.You, of course, can have more than one member of an LLC. The structure of an LLC is different than a regular C-Corp, in that there are member(s) and not shareholder(s). There is one main member called a Manager, and that person has the same type of power as does the Chairman of the Board of a regular corporation. At the end of each year the LLC files a return with the IRS showing how much the profits or losses are and who the members are that get the credit for the losses or owe the taxes for the profits. The LLC does not pay taxes.
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