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b. An incorporated business whose stock is not publicly traded on the stock market is referred to as a “closely held corporation.” This is applicable to most small, incorporated businesses in which the stockholders are also working in the business. A Professional Association (PA) is a corporation. The profits of the corporation are taxable income to the corporation and not to the individual stockholders unless the profits are distributed as dividends. If the income the a/b draws from the business does not appear reasonable or sufficient to meet his living needs, explore the possibility that funds are being used from the business accounts to pay personal expenses, and if so, budget as countable unearned income.

c. Information about Corporations and Limited Liability Companies registered in North Carolina may be found at the following website: www.secretary.state.nc.us/. You will need the name of the business to access. On the home page, scroll down and select the bulleted item, “Search by Corporate Name”. Enter the business name. When the next page is displayed, click on the business name to view the profile. Select “View Document Findings” to get more details.

1) C Corporation

This is the more common type of corporation. An a/b or financially responsible person who works for a corporation for a salary is not self-employed even if he is the primary stockholder in the corporation. Treat the salary as wages and treat the distribution of profits from ownership of the corporation’s stock as unearned income, unless profits are distributed as dividends.

2) S Corporation

Some small businesses incorporate as an S Corporation. This is a special tax status, which operates the same as a partnership in that the income is taxed at the individual level and there are no corporate taxes. The income is budgeted as self-employment and also includes any profit or loss of the corporation. Income from an S Corporation paid to a corporate director as fees is also budgeted as self-employment income.

3) Limited Liability Company (LLC) Also known as Limited Liability Corporation.

(a) Limited Liability Company is a legal form of a business structure with corporation and partnership qualities. Members are protected from liabilities for acts and debts of the company, and have the tax advantages of a partnership,