Deciding which business structure is right for you is among the most important decisions involved in starting a new business. Use the information below to help decide which option will best meet your needs.
An S corporation is simply a tax designation granted by the IRS. When you choose between creating a corporation or an LLC, you can also decide how you want your business to be taxed.
What makes the S corp different from a traditional corporation (also called a C corporation) is that as the owner of an S corp, profits and losses can pass through to your personal tax return. Consequently, the business itself is not taxed - only the owner or shareholders are taxed.
Here's a comparison of some key differences between "C corps" and "S corps." Given the complexity and importance of this decision, you should speak with a tax advisor to determine what makes sense for your financial circumstances.
A nonprofit corporation is an organization whose purpose is something other than making a profit. A nonprofit is focused on accomplishing goals that benefit the public rather than on making money to distribute to company owners.
Having nonprofit status doesn't mean that the organization will not make money. It simply means that any money made must be reinvested in the organization in the form of employee salaries and other overhead, such as administrative and fundraising costs. Assets owned by the nonprofit are for the benefit of the organization as a whole, rather than individual shareholders.
Some typical categories of nonprofits include public charities, social advocacy organizations, philanthropic foundations, and professional organizations.