Question

decision point: the best type of corporation for your company
the concept of unlimited liability scares you. you do a considerable amount of research, have several conferences with larry, and consult the small business administration, and you determine that incorporation may be the best way to avoid unlimited liability for the debts of the business. however, youd also like to avoid double taxation.
with those criteria in mind, which of the following corporations would be best suited for your business?
select an option from the choices below and click submit.
publicly held corporation
professional corporation
subchapter s corporation

Explanation:

A Subchapter S corporation (S - corp) offers limited liability protection for its shareholders, similar to a regular corporation. This means the shareholders' personal assets are generally protected from the business's debts. Additionally, an S - corp avoids double taxation. In a C - corp (a regular corporation), the business's profits are taxed at the corporate level, and then when dividends are distributed to shareholders, they are taxed again at the individual level. But in an S - corp, the income, deductions, and credits of the business "pass - through" to the shareholders' personal tax returns. So, the business itself is not taxed, only the shareholders are taxed on their share of the business's income.
A publicly - held corporation is a C - corp. It is subject to double taxation. A professional corporation is also a type of C - corp in many cases and is subject to double taxation (although there are some special rules for professional corporations in some states regarding taxation and liability, but generally, it does not avoid double taxation as effectively as an S - corp).

Answer:

Subchapter S corporation