LEARNING CENTER
Are you ready to form a corporation or LLC but need more information? Find it here.
- Why Consider Incorporating?
- Choosing the Right Entity Type
Corporations
What sets a corporation apart from all other types of businesses is that a corporation is an independent legal and tax entity, separate from the people who own, control and manage it.
Comparison Chart: Compare business entities.
Because of this separate status, the owners of a corporation don't use their personal tax returns to pay tax on corporate profits—the corporation itself pays these taxes.
Owners pay personal income tax only on money they draw from the corporation in the form of salaries, bonuses and the like.
One of the main advantages of incorporating is that the owners' personal assets are protected from creditors of the corporation. For instance, if a court judgment is entered against your corporation saying that it owes a creditor $100,000, you can't be forced to use personal assets, such as your house, to pay the debt.
Because only corporate assets need be used to pay business debts, you stand to lose only the money that you've invested in the corporation.
