Business Bank Account Setup

For-profit businesses can typically choose between the regular C-Corporation, S Corp or Limited Liability Company (LLC). The primary reason to incorporate is to protect the owners and shareholders from legal liabilities of operating a business. With the C-corporation, a separately taxed legal entity is formed, resulting in the unfortunate potential for profits to be taxed twice — both at the federal and state level. But this double taxation issue can be avoided by either forming an S-Corp or LLC.

However, the S-Corp comes with several restrictions such as all shareholders must be American citizens or residents. If owners don’t meet the requirements of forming an S-Corp, then the LLC can provide the same liability protection, while avoiding double taxation. Structurally, the LLC is similar to that of a general partnership, excepting that the LLC comes with liability protection for its members. However, since the LLC has no stocks, if the owners plan to raise capital through issuance of shares, then the C-Corp is a better option. Furthermore, the C-Corp’s disadvantage of double taxation diminishes as profit grows beyond six figures.

Other less common for-profit entities include professional corporations (PC and PLLC), and B-Corp. Professions that are regulated by the state (e.g., doctors, accountants) must form PCs or PLLCs instead of C-Corp or LLCs. The B-Corp is the newest form of corporate entity, which combines elements of not-for profit with for-profit. B-Corps are usually form by businesses seeking to make a profit, while accomplishing a social mission.