The Types of Different Corporations and Their Legal Status
To highlight the differences between different types of corporations and their legal statuses, we must first understand what a corporation really is. A corporation is basically an entity that has the authority by the law to act as a distinct person from the shareholders that own it. Generally there are many types of corporations that exist and can be classified based on the following factors:
- Business intention of corporation
- How the corporation’s income is taxed
- The number of stocks for issue and the shareholders
- The purpose of the incorporation (profit or non-profit)
Based on these factors, you can form different types of existing corporations in Nevada.
Types of Corporations in Nevada
If you plan to form a Nevada Corporation, there are many legal processes involved which differ from type to type. Hence, you should be sure about what corporation you want to form as there are many types available.
- Business Corporation – is a corporation that is formed to actively engage in business activities for profits. Business corporations are also known as for profit corporations for that matter.
- C Corporation – is a corporation that has its income taxed from the corporation instead of its shareholders. All corporations that do not choose the tax status of S Corporation are C Corporations by default under the Internal Revenue Code.
- Close Corporation – is a corporation that has its stocks traded freely and held by a few number of shareholders who are either of the same family or have personal relations with the forming bodies. The privileges and requirements of forming a close corporation can vary through jurisdiction.
- Controlled Corporation – is a corporation that has the majority of its stock held by either an individual or another firm.
- Cooperative Corporation – is a corporation that is primarily formed with the intention of providing profits, services, and incentives to the members instead of the corporate profits. The most common example of a cooperative corporation is when a property like a building is purchased in order to lease out the apartments for the shareholders’ gain.
- Foreign Corporation – is a corporation registered in a different state from the state where it has operations and business activities. These corporations are generally formed to leverage on the tax benefits in different states.
- Non Profit Corporation – is a corporation that is formed for purposes other than profit and is given special tax treatment.
- Private Corporation – is a corporation that is found and formed by private investors for nonpublic purposes like banking, manufacturing, etc.
- Professional Corporation – is a corporation formed for providing professional licensed services like physicians, lawyers, accountants, etc.
- Public Corporation – is a corporation that has shares traded to and from the public. These corporations are government owned and engage in business activities that benefit the general public. They are managed by public appointed boards and remain independent financially.
- S Corporation – is a corporation that has income taxed from shareholders instead of the corporation. Corporations that have limited shares are liable to be elected for the S corporation tax status by the Internal Revenue Code.