S Corporation carries

They are still responsible for the company based on their share percentage in the following circumstances, and have the potential to have their loss exceed if the following are found:

A Court determines the company is fraudulent. Corporate formalities have been neglected. Starting capital must have been enough for initial success. Personal assets have been added to cover expenses.

All officers, employees, agents and directors of the company are help personally responsible in the events that any liability arises as a result of their services. However, certain individuals in those categorizes can get indemnified for a cost. It will however only cover costs and expenses that arise from certain tasks. It does not remove legal responsibility.

Additionally, the company as whole can be protected from one person's mistakes through insurance several companies offer in regards to liability. Any company dealing with potential bodily injury should register for insurance.

C corporation

Next, we will look at C corporations. In very basic terms, A C corporation is a company that is designated to be taxed under Sub-chapter C of the IRS Code. A majority of companies act as C corporations. If you miss the minimum requirements of an S corporation by one qualification, it is typically where your company fits best.

The main difference between the C corporation and the S corporation is the number of individuals allowed to "own" the company. Meaning you can have more than 100 shareholders.

Additionally, other corporations can own shares in the C corporation, as well as foreign and domestic shareholders. This is considered a universal shareholder account. But unlike an S corporation, the C corporation is taxed on its profits. In turn the Shareholders are taxed on their earnings after that.

However, before a C corporation can be formed, the following steps must be done: A corporation Name must be established based on State Rules. All Director Positions must be filled in advance. The Articles of corporation must be completed with the fees posted. An approved corporate bylaw must be completed with a plan to follow. One initial meeting must have occurred with the board of directors. Stock Certificates must have been issued for the initial owners. License and Permits must be obtained and approved. You must keep records of annual reports and meetings on file at all times.

Liabilities for a C corporation are similar to the S corporation.