The Benefits of a Corporation or LLC

Exploring The Benefits And The Structure of a Corporation


If we looked back less than a decade ago, most small businesses were laid out on a business structure predominantly comprised of corporations. However, other entity types, especially LLCs, offer extra flexibility and reduced administrative burden for running a business in today’s time. Despite the change that has taken place, there are several benefits of a corporation, and often in need of the moment, you have to actively choose the corporate business structure to keep the flow smooth. Creating a healthy dialogue with your advisors should be warranted before laying down the new company’s foundation.

What does a corporation mean? A corporation can be regarded as a business entity that serves as a distinct legal “person.” It is separated from the business owners and provides legal protection against personal liability regarding business debts.

Corporations can be of two different kinds:

  • A C-corporation: This refers to a separate taxpayer.
  • An S-corporation: This refers to a “pass-through” tax entity, which means that at the company level, you don’t have to pay federal income taxes. Instead of that, the records providing insight for profits and losses a business deals with pass through its respective owners, and the owners report these gains or losses on their tax returns.

There are certain requirements that corporations are required to fulfill.

  • Keeping complete and well-tracked records
  • Filing a corporate tax return
  • Obliging to corporate formalities that include finances, decision making, and record-keeping so that corporations can retain a certain degree of liability for owners

Giving Rise To a Corporation through Articles of Incorporation

You have to file Articles of Incorporation, which is referred to as “Certificate of Incorporation” in a few states with the state government’s business category to build a corporation.  It is important to note that it is usually a part of the secretary of state’s office. A bill of no more than a few hundred dollars will have to be made for filing.

You can fill out a prescribed form in almost every state that entails necessary information about the corporation. The information about the corporation that has to be included is listed below.

  • Name
  • Address
  • Contact information for the person (also known as the “registered agent”) in charge of receiving legal papers on the corporation’s behalf

In a few states, the requirement also includes a list of all the directors’ and officers’ names and addresses associated with the corporation. If the corporation wishes to run the business in more than one state, then it must separately register under the business division in each state that it expects to add. The process usually includes filing a form and submitting the fees in the same way as filing for the original Articles of Incorporation; however, the initial state where the corporation is running continues to remain the “home” state.

There is also a requirement for the adoption of corporate bylaws. In addition to that, corporations have to issue stock to respective shareholders and keep a record of who owns the business’s ownership interests.


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Defining The Structures of Corporation Management

When it comes to corporations, there is mostly is a multi-tier management structure. Starting at the top of the pyramid, the top tier of management is known as the Board of directors. The shareholders choose the Board of directors. The responsibility lying on the Board of directors is to formulate ideas and reach decisions on a bigger scale on behalf of the corporation.

Those decisions may include but will not be limited to certain actions that will give the corporation a boost and produce a positive impact on the business. The findings will entail reaching out to investors, launching a brand new product line, or initiating a multi-year lease.

The Board of directors will then elect respective corporate officers such as the CEO, CFO, president, etc. These officers are tasked with performing and reporting on the daily affairs that are running in the corporation. The types of activities that officers have to overlook are employment decisions, sales, operations, and similar other compulsory tasks to scrutinize for running a business successfully.


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