A corporation is a legal entity that exists separately from
its owners. Creation of a corporation occurs when properly
completed articles of incorporation are filed with the correct
state authority, and all fees are paid.
What is the
difference between an "S" corporation and a "C"
corporation?
All corporations start as "C" corporations and are required
to pay income tax on taxable income generated by the
corporation. A C corporation becomes a S corporation by
completing and filing federal form 2553 with the IRS. An S
corporation's net income or loss is "passed-through" to the
shareholders and are included in their personal tax returns.
Because income is NOT taxed at the corporate level, there is
no double taxation as with C corporations. Subchapter S
corporations, as they are also called, are restricted to
having no more than 100 shareholders.
Do I need an
attorney to incorporate?
No! Having an attorney is not a legal requirement to
incorporate, except in South Carolina (a signature by a SC
attorney is required on articles of incorporation). In all
other states, you can prepare and file the articles of
incorporation yourself; however, you should be thoroughly
versed in the laws of your state.
In spite of their seemingly high hourly fees, a good
corporate attorney can be a valuable resource to your small
business. If you are unsure of what steps your business should
take and you don't have the time to research the mater
yourself, even the cost of one hour's consultation can pay off
handsomely later. Just remember to bring lots of
questions.
Once you have decided, we can form your corporation and
save you money.
How do I know
if my name is available?
We will request your two top name choices. We will check
these as part of your order. If neither of these is available,
we will contact you for other name choices.
How do I name
my corporation?
First, we recommend that you spend some time coming up with
a name for your corporation. Although each state has different
rules concerning the naming of your corporation, the most
common rule is that it must not be deceptively similar to
another already formed company. The corporate name must
include a suffix. Some examples are "Incorporated", "Inc.",
"Company", and "Corp." However, your state may have different
suffix requirements.
What are the
benefits of incorporating?
The primary advantage of incorporating is to limit your
liability to the assets of the corporation only. Usually,
shareholders are not liable for the debts or obligations of
the corporation. So if your corporation defaults on a loan,
unless you haven't personally signed for it, your personal
assets won't be in jeopardy. This is not the case with a sole
proprietorship or partnership. Corporations also offer many
tax advantages that are not available to sole proprietors.
Some other advantages include:
-
A corporation's life is unlimited and is not dependent
upon its members. If an owner dies or wishes to sell their
interest, the corporation will continue to exist and do
business.
-
Retirement funds and qualified retirement plans (like
401k) may be set up more easily with a corporation.
-
Ownership of a corporation is easily transferable.
-
Capital can be raised more easily through the sale of
stock.
-
A corporation possesses centralized
management.
What is a
Registered Agent?
Most every state requires that a corporation have a
registered agent. That agent must have a physical location in
the formation state. The registered agent can typically be any
person (usually a resident of the state) or any properly
registered company who is available during normal business
hours to receive official state documents or service of
process (lawsuit).
How many
Directors/Shareholders do I need?
Most states allow for one person to act as shareholder,
director, and all officer roles.
How many shares
of stock should I choose, and at what par value?
We provide a default of 200 shares, although you can choose
any amount you want on all orders. Your par value is not
requested on all orders, and is usually expressed as "No Par
Value" or some dollar amount per share such as "$1.00" or
"$0.10." Some states require that you do not issue your stock
for less than the par value. Some states also base their fees
on the number of shares authorized, multiplied by the par
value.
What is a
Federal Tax Identification Number or EIN?
Your corporation is required to have an Employer
Identification Number (EIN) also known as your Federal Tax
Identification Number so that the IRS can track payroll and
income taxes paid by the corporation. But, like a social
security number, an EIN is used for most everything the
business does. Your bank will require an EIN to open your
corporate bank account.
We provide two EIN services:
-
Basic EIN Service - We prepare and email your SS4
(EIN application) & easy one-page instructions for
obtaining your EIN. You need only review, sign and fax or
call in the information to the IRS to get your EIN.
-
Full EIN Service - We actually obtain your
company's EIN for you.
What do I need
to do AFTER I incorporate?
You must have your initial shareholder(s) meeting to elect
your director(s), if your director(s) haven't been designated
in the articles. Then, you must have your initial
organizational meeting of your directors. At this meeting, you
will need to elect your officers, adopt your company's bylaws,
and issue your stock (among other actions).
How do I get
started?
Once you have decided on a name, order your corporation
online. Once we receive your paid order, we verify the
availability of your name choices, draft your articles, file
them with the state and send you all appropriate documents
after they have been filed.
