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It is extremely important to protect your assets when starting a business. In order to do this, you must create a business entity such as a corporation. One type of entity is the benefit corporation. If starting a non-profit is not your choice, but you want to make a positive impact on society, then a b-corporation is a great choice. Unlike traditional corporations, b-corporation makes strides to the betterment of the public. What separates them from non-profits is that benefit corporation can establish a return of investments. Non Profits- are funded by charitable donations. The b-corporation is a new type of business, where directors walk the line between public interests and the interests of their share/stakeholders.

If you decide to go with a b-corporation, liability protection will be secured for all of your assets. The benefit corporation provides stock issuance in your company. This will help demonstrate reliability to potential customers.

C Corporation

Corporations operate differently from other kinds of business entities.  A corporation is separate from its owners, managers, and other people who control it. It is its own independent entity. Profits are taxed separately from the owners. Each owner is a shareholder who elects a board of directors for managing the company. Each shareholder is not personally liable for any business debts and has limited liability for the company itself. They are protected from any lawsuits that the corporation may face.

c corporation

Other benefits of C Corporation

– Unlimited number of stockholders;

– Great possibilities for tax savings;

– Can raise additional funds by selling stocks;

– The owner can issue different classes of stocks to attract different groups of investors.

What is a Nonprofit Corporation?

A non-profit corporation is a corporation that has been arranged to meet specific tax-exempt purposes.  In order to qualify as a non-profit, a corporation must establish itself in order to benefit: the public, a specific group of individuals, or the membership of the non-profit.

Some examples of Nonprofits include religious organizations, charitable organizations, political organizations, credit unions, and membership clubs.

What Are The Advantages Of A Non-Profit Corporation?

No Taxes

Non-profit corporations can receive state and federal exemptions from corporate income taxes in addition to other taxes. Both state and federal tax rates can be burdensome. Seeking exemption is a good idea if your mission-related services, exhibits, product sales, or performances are expected to earn large quantities of money. Tax-exempt status can also help alleviate the financial toll from local and county taxes as well.

Tax-Exempt Public and Private Donations

Once incorporated, a majority of charities apply for nonprofit designation from the IRS. As a 501©(3) nonprofit can receive grants and donations. A foundation can only provide grants for 501©(3) organizations.

Federal state and income tax deductions can be made for individual donors to your non-profit corporations and bequests can be exempt from federal estate taxes.

Protection from Personal Liability

Protecting members of your organization from personal liability is one of the most significant advantages of incorporation.

Protection liability for corporate debts or lawsuits can help board members, officers, and employees of your organization. Corporate assets are the only thing Creditors can come after. Your personal assets, the people you manage, work for, or volunteer at your non-profit are protected.

Regardless of if you incorporate these protections, there are circumstances that sit outside of incorporation law. It is wise to purchase liability insurance

Organizational Perpetuity

The individuals who manage or organize a corporation are sperate from the organization itself. This separation between the two provides protection from liability.  This also means that the organization is immortal.

A nonprofit organization will continue to exist far beyond the lifetimes of those who start and manage it. This is a focal point for long-term donors who are looking to support the effort with a rock-solid history.

Employee Benefits

Group life insurance, health insurance, a pension plan, and many other benefits are offered by corporations that are unavailable to workers of unincorporated organizations.

Corporate Structure

Forming a nonprofit corporation is not simple. But the preparation requires clarity about mission, operating rules, and procedures for decision making.

If the board members of a corporation have opposing ideas, then it is essential for a nonprofit to establish clear-cut rules in regards to delegating authority and how to achieve end-goals. Establishing these principles within the articles of incorporation and bylaws helps the organization run smoother.

Professional Corporation or PLLC

benefit corporation

The state of California does not permit certain professions in forming an LLC or a traditional company. Instead, they must form a professional corporation.

Professions that are required to be professional corporations include those who have a state license/. These can include dentists, certified public accountants, doctors, veterinarians, lawyers, optometrists, marriage and family therapists, psychiatrists, and psychologists.

What is a Professional Corporation or Professional LLC?

Professional corporations and professional limited liability companies (PLLC) are corporations and limited liability companies organized for the purpose of providing professional services. Usually, professions, where the state requires a license to provide services, require the formation of professional corporations or PLLC.

What Is Different About Professional Corporations?

Liability for malpractice is not a typical provision from most corporations. Although you have the option to have limited liability for claims not based on malpractice, for example, a slip and fall accident. By forming a professional corporation you may be able to deduct payments for benefit plans such as disability, health, or group term insurance.

Why Form A PLLC?

Liability for malpractice is not a typical provision from most corporations. Although you have the option to have limited liability for claims not based on malpractice, for example, a slip and fall accident. By forming a professional corporation you may be able to deduct payments for benefit plans such as disability, health, or group term insurance.

What is an S Corporation?

benefit corporation

An S corporation (S corp) is a specific corporation that is established through an IRS tax election. Double taxation can be avoided by electing to be an S corporation.

An S corp is a corporation with the Subchapter S designation from the IRS. What makes the S corp different from a traditional corporation (C corp) is that profits and losses can pass through to your personal tax return.

Consequently, the business does not receive a tax itself and only shareholders are taxed. Any shareholder who works for the company must pay him or herself “reasonable compensation”. The shareholder must receive compensation fair market value, or the IRS might reclassify any additional corporate earnings as “wages”.

Some S Corporation Advantages:

  • Limited liability. Company directors, officers, shareholders, and employees enjoy limited liability protection.
  • Pass-through taxation. Owners report their share of profit and loss on their individual tax returns.
  • Elimination of double taxation of income. Income is not taxed twice – once as corporate income and again as dividend income.
  • Investment opportunities. The company can attract investors through the sale of shares of stock.
  • Perpetual existence. The business continues to exist even if the owner leaves or dies.
  • Once-a-year tax filing requirement. Versus c corps, which must file quarterly.

To Qualify for S Corporation Status, the Corporation must:

  • Be a domestic corporation
  • Have no more than one hundred shareholders
  • None of whom are nonresident aliens or corporations
  • All of whom consent to the election
  • Have only one class of stock
  • Not be a member of an affiliated group (only individuals, estates, and certain exempt organizations and trusts qualify)

Let DOT Operating Authority help you file for C Corporation!

At DOT Operating Authority we will be happy to help you with every aspect of starting a successful business. Our team can assist you with filing for any kind of business entity, starting with sole partnership and ending with C Corporation. We will make sure you meet all the legal requirements and your paperwork is in order. Our specialization is the trucking business, and we can help you with every step of establishing your trucking company. Obtain a USDOT Number and get an authority to operate, file for a corporation and comply with all the legal rules – easily and without any mishaps. 

Call us today and let us know how we can be of help. We are looking forward to assisting you!
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