A corporation is treated as a single entity distinct from its owners that can distribute shares and can exist indefinitely. Corporations offer limited liability to shareholders, provided the correct formalities are followed. Two types of corporations exist for tax purposes under the internal revenue code:
1) C Corporations and 2) S Corporations Although corporations are classified as S Corporations or C Corporations for federal tax purposes, they are governed by state corporation acts.
Most corporations in Illinois are incorporated under the Illinois Business Corporations Act. (A close corporation may be utilized based on the type of business and number of shareholders.) However, individuals who wish to incorporate a business that requires personal, confidential relationships with loyalty to clients or patients (such as medical doctors, dentists and attorneys) are required to file as either a professional corporation or a medical corporation.
