Expert: Terry Leeders - 5/12/2007

Question
Hi. I am about to start-up a technology service company and thinking what
> direction to start off with. Either going with S Corporation or C
> Corporation. I have 3 partners in this. Eventually we will get more
> shareholders as times goes by. My concern is, S-Corporation has a lot
> of benefits yet, since I am going to have this business grow in partnership.
> Does bankruptcy play a big part under S-Corp in this if one of the
> shareholders file bankrupt for their personal debt?  I would really
> appreciate any help. I would like to make the right decision between C and S
> Corp. Thanks.

Answer
I would say that a previous bankruptcy would effect both types the same.  Most vendors, for small companies, check personal records for all shareholders - for leases, credit card applications etc.  I would suggest you meet with a business law attorney to discuss the different corporations, and look more to the tax issues each imposes to help guide you.  The bankruptcy shouldn't cause too many problems.
Good Luck with the business
Terrance Leeders
Chicago Bankruptcy Network