CORPORATIONS

​A corporation, although a legal fiction, is a separate "person."  If done properly, this "person" can shield you from personal liability from creditors.  There are different types of corporations and choosing the correct one depends on your particular circumstance.  This choice may have significant tax and other implications.  

Corporations typically have a board of directors, officers, and shareholders.  However, more often than not, the same person or group of people serve as all three in different capacities and functions.  Most family businesses that are set up as a corporation fall under this category.  They are sometimes referred to as a "closely held" corporation. There are certain rules and regulations that apply to closely held corporations.

When most people start off with a business and they want a corporation, they want an S corporation.  This is especially true if a professional, such as a dentist, lawyer, doctor, etc., wants to set up a corporation while being the sole shareholder.  

All corporations start off as C corporations.  Becoming an S corporation is an election that is made and does not necessarily impact personal liability of its shareholders.