S Corporation
Massachusetts has been an innovator of the laws regulating S Corporations, and as such this business entity is extremely popular among small business owners.
Forming an S Corporation not only protects personal assets, but also allows a person or small group to retain ownership and control of a business.
This is an attractive option, as many of the regulations that affect the C Corporation do not apply to S Corporations-- most notably, S Corporations are not "double taxed" like C Corporations.
C Corporation
C Corporations are heavily regulated, especially upon an initial public offering of stock.
For this reason, and the added sting of double federal income taxation, the C Corp is generally suitable for larger businesses, with a need (and demand) for investor capital (and control).
An interesting fact is that corporations were initially conceived as a means of asset protection, or in other words, preventing the owner of a company from being sued personally.
The way this works: the owner(s) relinquish control of the company to a board of directors, who more or less have complete control over the business's affairs.
Thus, if the corporation is somehow subjected to liability, perhaps by injuring one or several people through negligence, it is not the fault of the owners since they are merely monetary investors, or shareholders, and have no direct control over the business. Therefore, plaintiffs very rarely "pierce the corporate veil" and hold shareholders liable.
However, since the corporation entity opened the way for asset protection, there are now simpler and cheaper ways to protect yourself from liabitilty, such as the aforementioned S Corp and the Limited Liability Company.
Let our expertise guide you through the difficult process of business formation, and work with you on all the pros and cons of the various entities available.
Please contact us to set up an appointment to discuss your options.