-
Types
of Corporations
GENERAL
CORPORATION:
The most common of all corporate structures is the General Corporation. The
General Corporation, like all other corporations, is a separate legal entity
that is owned by stockholders (shareholders, i.e. investors). A General
Corporation may have an unlimited number of stockholders. Due to the legal
nature of the corporation, stockholders are protected, personally, up to the
amount of their investment, from the creditors of the corporation.
Advantages
 Personal assets are protected from
business debt and liability
Corporation is perpetual (life
extending beyond the illness or death of the owners)
Insurance, travel, and retirement
plan deductions are TAX FREE benefits
The ownership of the corporation is
easily transferable
Ownership will not affect current
management
Raising capital through the sale of
stocks and bonds is simplified
Disadvantages
More Expensive to form than
proprietorship or partnerships
Legal formality
Must abide by state and federal
rules and regulations
CLOSE
CORPORATION:
A Close Corporation has a few minor differences as compared to General
Corporations. In most states where they are recognized, Close Corporations are
restricted as to the number of shareholders, usually between 30 - 50. The
shares of stock upon sale are to be offered to existing shareholders first.
Generally a Close Corporation is particularly suited for the entrepreneur
looking to run a "one-person" corporation or for a small group of
individuals who will all actively participate in the operation of the
business.
SUB CHAPTER S
CORPORATION:
S Corporations have the same basic advantages of General or Close
Corporations with a major distinction of tax liability. Where as the previous
corporation file and pay federal taxes on profits of the corporation, the
Sub-S Corporation eliminates Federal Corporate Income Tax. The IRS allows all
profits to "pass through" all profits to the shareholders personal
tax return.
Sub Chapter S Corp. Restrictions
Can only be a domestic
corporation
Only one class of stock is
permitted
No more than 75 stock shareholders
Only individuals can be
stockholders
Each stockholder must be a citizen
of the US or a Resident Alien
Limited
Liability Company
Advantages
of forming an LLC
In general: An LLC is a
hybrid between a partnership and a Corporation in that it combines the
"pass-through" treatment of a partnership with the limited liability
accorded to corporate shareholders.
Two members required:
Unlike a corporation which can have as few as one shareholder, most states
require that an LLC consist of two or more members (owners). Recently,
however, more states are allowing single-member LLCs. Please note,
however, that the IRS may treat a single person LLC differently than an LLC
with more than one member.
Separate Legal Entity:
Like limited partnerships and corporations, an LLC is recognized as a separate
legal entity from its "members."
Limited Liability:
Ordinarily, only the LLC is responsible for the company's debts thus shielding
the members from individual liability. However, there are some exceptions
where individual members may be held liable:
Guarantor Liability: Where
an LLC member has personally guaranteed the obligations of the LLC, he or she
will be liable. For example, where an LLC is relatively new and has no credit
history, a prospective landlord about to lease office space to the LLC will
most likely require a personal guarantee from the LLC members before executing
such a lease.
Alter Ego Liability: Very
similar to the judicial doctrine applied to corporations where a court may
hold the individual shareholders liable where the business entity is merely
the "Alter Ego" of its shareholders, a member of an LLC may also be
held liable for the LLCs debts if the court imposes its "alter ego
liability" doctrine.
Please note, however, that
although a corporation's failure to hold shareholder or director meetings may
subject the corporation to alter ego liability, this is not the case for LLCs
in California. An LLC's failure to hold meetings of members or managers is not
usually considered grounds for imposing the alter ego doctrine where the LLC's
Articles of Organization or Operating Agreement do not expressly require such
meetings.
Management and control:
Management and control of an LLC is vested with its members unless the
articles of organization provide otherwise.
Voting Interest:
Ordinarily, voting interest directly corresponds to interest in profits,
unless the articles of organization or operating agreement provide otherwise
Transferability: No
one can become a member of an LLC (either by transfer of an existing
membership or the issuance of a new one) without the consent of members having
a majority in interest (excluding the person acquiring the membership
interest) unless the articles of organization provide otherwise.
Duration: Although
many states now allow an LLC to have a perpetual existence, LLC's
traditionally were required to specify the date on which the LLC's existence
will terminate. In most cases, unless otherwise provided in the articles of
organization or a written operating agreement, an LLC is dissolved at the
death, withdrawal, resignation, expulsion, or bankruptcy of a member (unless
within 90 days a majority in both the profits and capital interests vote to
continue the LLC).
Formalities: The existence
of an LLC begins upon the filing of the Articles of Organization with the
Secretary of State. The articles must be on the form prescribed by
the Secretary of State. Among the required information on the form is the
latest date at which the LLC is to dissolve and a statement as to whether the
LLC will be managed by one manager, more than one manager, or the members.
To validly complete the
formation of the LLC, members must enter into an Operating Agreement. This
Operating Agreement may come into existence either before or after the filing
of the Articles of Organization and may be either oral or in writing.
Non
Profit Corporation
What is
a nonprofit corporation?
A nonprofit corporation is a
corporation that is formed that does not have a profit motive. In
general the nonprofit corporation is formed pursuant to a different state law
than a standard for-profit corporation. The corporation is formed for a
religious, charitable, educational, literary or scientific purpose. Nonprofit
corporations can apply for tax-exempt status at both the federal and state
level.
What are the advantages of filing a nonprofit
corporation?
Under 501(c)(3) of the Tax
Code, if your nonprofit is granted tax-exempt status your corporation will be
exempt from payment of federal corporate income taxes. Individual donors can
claim a federal income tax deduction of up to 50% of income for donations made
to 501(c)(3) groups.
In addition, a nonprofit is
eligible to receive both public and private grants.
Nonprofits also receive the
same liability protection as for profit companies, i.e., directors or
trustees, officers and members are typically not personally responsible for
the debts and liabilities of the corporation.
What purposes are valid for
a nonprofit corporation?
Under 501(c)(3) of the tax
code, to qualify for federal tax-exempt status, the nonprofit corporation must
be organized and operate for some religious, charitable, educational, literary
or scientific purpose.
The religious category
encompasses general types of religious organizations as well as more formal
institutionalized churches.
The charitable category
refers to services beneficial to the public interest.
The educational purpose is
defined as a purpose that allows for instruction for both self-development and
the benefit of the community.
The literary purpose
includes writing, publishing and distribution of literature which is utilized
to promote the public interest as opposed to commercial book writing and
selling.
The scientific purpose is
delineated as scientific research that is carried on in the public interest
rather than research incidental to commercial or industrial operations.
The purpose must be listed
in the articles of incorporation. Therefore, we ask all our nonprofit
clients to list the purpose in detail in the comment section of the order
form.
What specific steps are
necessary in order form a nonprofit corporation?
The first step in the
process, is to prepare and file the nonprofit articles of incorporation with
the proper state authority. The articles must contain the required language in
order to qualify for tax-exempt status. Incorporateusa.com prepares and files
nonprofit articles of incorporation.
Tax-exempt status must be
applied for at both the federal and state levels after the nonprofit articles
are filed. To apply at the federal level, a timely filing of form 1023 must be
made. The 1023 application must be postmarked within 15 months after the end
of the month when your articles were filed. Furthermore, as long as you
file on time, the tax-exemption is effective retroactively to the date on
which your articles of incorporation were filed. This step must be complied
with by one of the principals of the nonprofit corporation. To determine
what form needs to be filed at the state level, contact your state department
that deals with taxation.
The corporation must hold
annual meetings of directors and members and comply with corporate
formalities. Bylaws must also be adopted for the corporation. Our corporate
kit contains documents that help you comply with these corporate formalities.
How many directors are
nonprofit corporations required to have?
Most states require
nonprofit corporation to have a minimum of three directors.
However there are exceptions, and specific
state laws do change, therefore we do recommend that you call us if you have a
question in this regard.
Currently, the following states only require,
at minimum, one director: CA, CO, DE, IA, KS, MI, MS, NH, OK, OR, PA, SC, VA,
WA & WV.
In addition, the
following states allow less than three directors if there are less than three
members: LA, MA, MN & VA.
How do I file for my nonprofit corporation?
Incorporate USA, Inc. will file and execute
all the necessary paper work and documentation to file your nonprofit
corporation. Simply utilize our online order form or call 1-800-462-9995 to
place your order over the phone.
Limited
Partnership
Limited Partnerships in
general: In a Limited Partnership, one or more ‘general" partners
manage the business while "limited" partners contribute capital and
share in the profits but take no part in running the business. General
partners remain personally liable for partnership debts while limited partners
incur no liability with respect to partnership obligations beyond their
capital contributions. The purpose of this form of business is to encourage
investors to invest without risking more than the capital they have
contributed.
Duration: Death,
disability, or withdrawal of a general partner dissolves the partnership
unless the partnership agreement provides otherwise or all partners agree, in
writing, to substitute a general partner. Note, death or incompetence of a
Limited Partner has no effect on the partnership
Formalities: The
formalities of setting up and operating a limited partnership are very similar
to that of starting a small, for-profit corporation. The California Limited
Partnership Act, for example, requires the filing of a certificate with the
Secretary of State, applies restrictions on the use and availability of
partnership names, contains statutory requirements with respect to the manner
of calling and holding meetings, and contains many corporation-like
requirements.
Sole
Proprietorship
In General: This is the
simplest form of business. A sole proprietorship is not a separate entity
itself. Rather, a sole proprietor directly owns the business and is directly
responsible for its debts.
Unlimited Personal
Liability for Loss: In a sole proprietorship, the owner is personally liable
for the company, thus placing his or her entire personal assets and wealth at
risk. If an owner is married, that owner puts the community property at risk
as well.
Management and Control:
The owner (sole proprietor) has total management and control over the company.
However, the price for total management and control is that the owner is at
risk for personal liability incurred through the acts of the owner’s agents
or employees.
No Formalities: With the
exception of complying with any applicable licensing requirements, there are
no formalities required of a sole proprietorship. Note, however,
where the business is conducted under a name which does not show the owner’s
surname or implies the existence of additional owners, California, for
example, requires that the owner file a fictitious business name statement and
publish notice.
Transferability: The owner
can sell the business as he or she pleases.
Duration: The sole
proprietorship remains in existence for as long as the owner is willing or
able to stay in business.
- U.S. CORP 123 has served Clients Worldwide from Toledo to Tokyo,
Amsterdam to Alabama Since 1994!.
|
|
incorporate,incorporating,incorporation,llc,limited
liability company,form an llc,incorporate florida,florida corporation,new york
corporation,new jersey corporation,california corporation,incorporate
california,incorporate in california,incorporate in texas,incorporate in
pennsylvania,georgia corporation,trademark,
incorporate,starting a small business,s
corporation,copyright,incorporation,llc,starting a business,federal tax id
number,federal tax id,incorporating,tax id number,limited liability
company,tax form,federal id number,nevada corporation,starting your own
business,seal,article of incorporation,fein,corporate seal,incorporate a
business,florida corporation,delaware corporation,stock certificate,
corporate kit,forming a
corporation,incorporating a business,california corporation,c
corporation,offshore corporation,washington,federal identification
number,nevada incorporation,type of corporation,new jersey corporation,new
york corporation,tax write offs,incorporation services,florida
incorporation,ohio corporation,become incorporated,joint venture,texas
corporation,trademark application,incorporating in nevada,
professional corporation,delaware
incorporation,division of corporation,tax id application,florida division of
corporation,register a trademark,,sole proprietor,corporate form,incorporate
in nevada,north dakota,sub s corporation,california llc,sub chapter s
corporation,forming corporation,incorporating in florida,trademark
attorney,incorporate usa,
registered agent,trademark a name,ct
corporation,federal trademark,incorporate in delaware,incorporate in
florida,incorporating in delaware,limited liability co,california limited
liability company,form an llc,state tax id,corporation formation,federal tax
id number application,new jersey incorporation,texas incorporation,texas
llc,forming an llc,incorporate in california,
michigan llc,texas limited liability
company,business formation,incorporate delaware,incorporate
florida,incorporate in new jersey,montana llc,registering a
corporation,startup business,state trademark,apply for a tax id
number,delaware llc,forming a llc,georgia corporation,incorporate in new
york,incorporate new york,incorporating in georgia,incorporating in
ohio,incorporating in texas,logo trademark,michigan limited liability company,
new york incorporation,nj corporation,north
carolina corporation,ohio limited liability company,reduce tax,resident
agent,alabama corporation,arizona corporation,certificate of
incorporation,closed corporation,colorado llc,corporate by law,delaware
incorporate,forming a business,georgia incorporation,incorporate in
texas,incorporate nj,incorporate ohio,massachusetts limited liability
company,missouri limited liability company,nevada llc,
new jersey limited liability company,new
york llc,north carolina incorporation,oregon llc,pennsylvania
incorporation,pennsylvania limited liability company,tax savings,wisconsin
limited liability company,colorado incorporation,corporate funding,corporate
stock,illinois corporation,illinois incorporation,incorporate in
arkansas,incorporate in georgia,incorporate in iowa,incorporate in
nebraska,incorporate in oregon,incorporate in pennsylvania,
incorporate in wyoming,incorporate
minnesota,incorporate north carolina,incorporate texas,llc
organization,louisiana llc,maryland limited liability company,massachusetts
llc,michigan corporation,minnesota corporation,minnesota
incorporation,missouri incorporate,missouri llc,new jersey incorporate,new
mexico limited liability company, |
