CORPORATION EIN APPLICATION SERVICE

WHAT IS A CORPORATION?

A corporation is type of business that is a separate legal entity controlled by a board of directors.  The corporation is formed by filing articles of incorporation with the state’s secretary of state.  A corporation has all the legal rights of an individual, except the legal right to vote and a few other limitations.  The shareholders (owners) of the company are considered separate from the corporation.  The corporation can last indefinitely and is responsible for its own debts and obligations.  The shareholders are not liable for any corporate liabilities.

A corporation is subject to double taxation.  The corporation will need to pay taxes on its net income and the shareholders also have to pay taxes on any dividends received from the corporation.

A S corporation is a form of a corporation with special tax privileges.  Domestic corporations with 100 or fewer shareholders that have only one class of stock, have the same benefits as a regular corporation but can be taxed as a partnership.  This legal structure allows the S corporation to avoid double taxation.  The business income, losses, deductions and credits are passed down to the shareholders. The shareholders then report the income and losses on their personal tax returns.  The S corporation itself is exempt from federal income tax other than tax on certain capital gains and on passive income.

A S corporation is formed by filing articles of incorporation with the state’s secretary of state and by filing Form 2553 (Election by a Small Business Corporation) with the Internal Revenue Service to elect S corporation status.

A personal service corporation is a corporation that offers professional services in accounting, actuarial science, architecture, consulting, engineering, health, law or performing arts.  Financial services are not considered eligible.  To be considered a personal service corporation, the shareholder(s) must own all or most of the stock.  The shareholders are also employees of the corporation who perform the professional services offered.  This corporation type sells its ideas or expertise and does not sell goods or products.

A personal service corporation is formed when the owners (shareholders) file articles of incorporation with the state’s secretary of state to establish the legal entity.