But if you have a corporation—one you formed or inherited—should it be S or C? What does this alphabet soup even mean?
A business is what you make of it, and that’s not just a marketing tactic or a business school platitude. When it comes to structuring your business, your selection of “entity” is key.
Do you own, stand to inherit, or are just plain curious about how to start a business (especially if you have been downsized in this economy)? If yes, then you should read a recent article in Forbes explaining the differences between a “C” and an “S” corporation. It is titled “C or S Corporation Choice is Critical for Small Business.”
Spoiler alert: the main distinctions between the two basic corporate structures are all about the tax code. That noted, however, there are other significant differences between the two. Not to muddy the already murky waters, the article explores the terrain between these old standards and the new standard that is the LLC, or Limited Liability Company.
LLCs are, by and large, simpler entities, but that doesn’t mean they are ideal in all situations. For some current reading on the capabilities of the LLC, it’s worth taking a hop over to the Wall Street Journal, which recently published an article titled “An Inspired Financing Choice for Artists and Patrons."
These articles only scratch the surface regarding what you need to know about the veritable alphabet soup of available business structures. Ultimately, you will need to bite the bullet and obtain qualified legal and tax counsel to help you select and structure the appropriate entity for your unique circumstances and objectives.
Reference: Forbes (May 3, 2012) “C or S Corporation Choice is Critical for Small Business”
The Wall Street Journal (May 21, 2012) “An Inspired Financing Choice for Artists and Patrons”