There are two types of corporations: C corporations and S corporations.

An C corporation is the more common type between the two. It may have unlimited owners to help raise capital. This type of corporation can be subjected to corporate tax rates. Among the two, this is a great choice for start-up businesses, if you plan on bringing in more venture funds, grant equity to employees and plan on going public or being acquired by another.

An S corporation runs a little differently. While the corporation might file a tax return, the company will report the gains and the profits on the personal taxes to avoid double taxation. Both S and C corporations have limited liability.