Later, when the corporation distributes its earnings as dividends to stockholders, the stockholders must include the dividends as personal income on their tax returns. This type of corporation limits the number of stockholders to thirty-five. If offers most of the limited liability protection of the corporation, but Subchapter S corporate income is taxed only once as the personal income of the owners. Many small companies are Subchapter S corporations because it's a good way for a small company to avoid the double taxation of corporations. A nonprofit corporation is set up with a specific mission to improve society.
Nonprofit corporations are tax-exempt .
They do not pay taxes on their income because the income is being used to help society. On the other hand, nonprofits may not sell stock or pay dividends. No one owns a nonprofit corporation. Doing business as an LLC offers several advantages over partnership or a corporation. And all LLC members can take an active role in the operation of the business without exposing themselves to personal liability, which limited partners cannot do.