Which corporate structure to choose

There are two types of for-profit corporations: a C corporation and an S corporation. All corporations start life as a C Corp. All large corporations, like the publically held ones, are C Corps. After incorporation, many small companies make what is called a Subchapter S election and become an S Corp.

The primary advantage of an S corp is that it's not a tax-paying entity, and all income or loss flows directly to, and is reported on, the tax returns of the shareholders. However, an S corp offers the same liability protection as a C corp does. This protection is commonly known as "the corporate veil."

There is also the limited liability company (LLC) option. An LLC operates much like a general partnership, but with the liability protection offered by one of the incorporation options. Just like corporations, LLCs can vary by state law.

Discuss your plans with a business attorney and CPA, so they can advise you on which option is best.