What types of corporations are there?

There are two main types of for-profit corporations, known as a C corporation and an S corporation. While most corporations are setup as C corporations, some elect to function instead as an S corporation in order to avoid double taxation and instead have the pass-through taxation that partnerships use. In addition to these two types of for-profit corporations there are also nonprofit corporations, which are often used by charities. Finally, in limited circumstances, a corporation may be setup as a professional corporation, where the business is owned and operated by certain licensed professionals.

Some states allow one or more of the above type of corporations to operate as a close corporation, which means the business does not necessarily have to follow all of the formalities and rules that most corporations otherwise have to follow.