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Corporation

A corporation is a unique and legal entity separate from shareholders who own it. Apart from a sole proprietorship or a partnership, a corporation can be taxed by its own, can enter into contractual agreements, and can be sued. Shareholders in a corporation choose a board of directors, and the board of directors administer the corporation.

To prevent becoming liable for all aspects of the business when buying, it is advisable buying the assets of the corporation alone, rather than buying the corporation as a whole. Change of ownership doesn't result in the ending of the corporation.

 

Corporation - Pros:

- A shareholder in a corporation is responsible for their contributions in the capital of the corporation.
- A shareholder in a corporation has limited liability for debts of the corporation, or in decisions taken.
- Benefits supplied for employees are deductible.
- Stock sale can bring extra cash to a corporation.
 

Corporation - Cons:

- Establishing a corporation will likely need a higher amount of money and time than a Sole Proprietorship or a Partnership.
- Administrating a corporation is much different than a Sole Proprietorship or a Partnership, more paperwork is needed to abide by the tax laws.
- Dividend remuneration to shareholders may not be tax deductible.
 

Tax Forms needed by a Corporation

Form 1120 or 1120-A: Corporation Income Tax Return
Form 1120-W Estimated Tax for Corporation
Form 4625 Depreciation
Form 8109-B Deposit Coupon
Employment Tax Forms
Other forms as needed for capital gains, sale of assets, alternative minimum tax, etc.


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