C-Corporation or an S-Corporation
Choosing the Structure That Fits Your Needs
The advantages of incorporating are many. Contrary to a sole proprietorship, a corporation separates you from the school. The incorporated school is an entity in and of itself. When a corporation is created, the shareholders do not own the business or the property belonging to the corporation. The business and the property are owned by the corporation and the corporation, in turn, is owned by the shareholders. In addition, the rights and liabilities of the corporation are not the rights and liabilities of the shareholders.
The fact that you can establish an entity that works and thinks for itself and, if used properly, will stand between you and may lawsuit settlements is the primary reason why you incorporate. However, it should be made clear that the corporate shield can be penetrated to expose the primary officers to liability. Record-keeping and annual corporate updates with your attorney and accountant are critical to maintaining the integrity of a corporation. There are two primary forms of incorporation. Generally, a corporation is a C-Corporation. The other form of corporation is the S-Corporation. Each is somewhat distinct and offers certain advantages for the school owner, depending on your situation.