What are the different types of stocks a Corporation is able to issue?
Corporate ownership is determined by shares issued to individual “share-holders” where each share represents a “unit” of ownership in that entity. The value of each “unit”, or share, is determined by several factors, including capitalization, company valuation, and the number of authorized shares issued. A typical start-up corporation may issue 10,000 or 100,000 shares for example, while a start-up S-Corporation might only issue 1000 shares.
C-Corporations are able to issue both common and preferred stock. S-Corporations are able to issue only common stock. The primary difference between preferred and common stock is that preferred stock usually pays a predetermined dividend usually to directors or select shareholders, but gives no inherent voting rights. Common stock shareholders, however, do have voting rights, but dividends vary depending on many factors including company profits and the number of shares issued.
C-Corporations have an advantage when it comes to raising capital because they can have foreign investors, and raise funds through the sale of stock.
C-Corporations can be a good choice for medium and large businesses, high-risk businesses, businesses that need to raise capital, and businesses that plan to “go public” with and IPO.
C-Corporations can issue preferred shares as well as common stock.
An S-Corporation can’t have more than 100 shareholders, and all shareholders must be U.S. legal resident
An S-Corporation can only issue one class of common stock where all shares have equal value & voting power.