Congratulations on completing the Business Structure Quiz! Based on your responses, a Corporation might suit you best. There are several types of Corporations:
- C Corporations
- S Corporations
- Nonprofit corporations
- Professional corporations
Asset Protection – Limited Liability
A properly formed corporation is recognized as a Separate Legal Entity with its own Tax Identification Number. The corporation is responsible for its liabilities and its debts…NOT the owners.
Marketing studies show, adding an “Incorporated” or “LLC” to the end of a business name provides a sense of credibility and trust. One sure-fire way to success in business is to conduct your business legitimately and with honesty.
Perpetual Life – Unlimited Duration
A Corporation is a separate legal entity with an existence of its own and a perpetual life. Therefore, the business may continue far beyond this lifetime and into future generations.
Sole proprietorships end upon the death of the owner. A Corporation, however, continues indefinitely until it is dissolved. Shares of ownership in a corporation can generally be sold, gifted or bequeathed to others.
Transferability of Ownership
A sole proprietorship does not have a life apart from its owner and it may not be transferred to a third party. The corporation, however, provides an excellent vehicle for transferring ownership: Ownership may be transferred by an exchange of assets for stock.
Ability to Build Credit & Raise Capital
Because a corporation is a separate legal entity with its own tax identification number (similar to a social security number for an individual) a corporation can build credit, borrow money and sell equity to raise capital. Most investors prefer investing in a corporation or LLC because of the limited liability and ease of transfer of the investment.
Number of Owners
Corporations and LLCs generally allow for an unlimited number of shareholders (except S-Corporations, which have a limit of 100 shareholders).
The tax rate for Federal Income Tax is lower for corporations than it is for individuals. In addition, corporations may be eligible for many tax deductions not available individuals or partnerships.
A copy of the results of this quiz will be emailed to you and a representative of the quiz sponsor, CorpNet.
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