Articles Tagged with S Corporation

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AdobeStock_288950388-300x180Selecting a legal entity is often one of the first critical decisions you must make when starting a new business. But it is possible to change or convert one type of business entity into another if your needs or circumstances change. If you want to know more about the potential tax and legal implications of such a move, the Silicon Valley corporations attorneys at Structure Law Group are here to help.

The Advantages and Disadvantages of S Corporations in California

Let’s assume you currently have an S corporation, and you want to convert it to a sole proprietorship. What are the advantages or disadvantages of such a conversion? And how would you go about accomplishing it?

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AdobeStock_299947443-300x162It is important to structure a business entity that will best meet your needs before starting a new business. Even once you have selected a corporation over a partnership or LLC, there are still choices to be made. S corporations and C corporations have some similarities. There are also critical differences, and it is important to understand how each type of corporation functions before selecting the one that will best meet your business needs. 

Only One Class Of Stock

There are several key differences in how ownership may be held in S corporations and C corporations. S corporations may issue only one class of stock, while C corporations can have multiple classes. S corps are limited to a maximum of one hundred shareholders – all of whom must be United States citizens or lawful residents. C corporations have no such restrictions on ownership. S corporations also cannot be owned by other S corporations, C corporations, LLCs, partnerships, or trusts. These stock and ownership restrictions make an S corporation unsuitable for many corporations. Be sure to consult with your business lawyer about your specific plans for issuing stock and apportioning ownership in your new business.

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