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What is a Corporation?
A Corporation is a business structure that offers asset protection to individuals that own and operate the company. As a separate legal entity, a corporation can open a bank account, enter contracts, build credit and buy real estate.
Here at DoMyLLC our trained incorporation specialists understand the needs of small businesses and are dedicated to providing excellent customer service.
Incorporating with DoMyLLC takes 15 minutes of your time. Simply place an order and provide a signature if needed. We make it that easy to DO.
Advantages
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Owners are not personally liable for the business debt.
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No restrictions on owners.
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Business expenses can be a tax deduction.
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Less chance of being audited.
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More credible business structure with consumers.
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Easy to raise capital.
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Easy to transfer ownership.
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Disadvantages
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Double Taxation – C-Corporation income is taxed and dividends distributed to shareholder are taxed as well.
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Many corporate formalities.
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More expensive to maintain than a sole proprietorship or partnership.
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In order to file a Corporation, Articles of Incorporation need to be filed with the Secretary of State and filing fees need to be paid.
Once the state approves the corporation, it can then legally conduct business.
Starting a corporation is one of the most common things business owners do to limit their personal liability. In today's economy businesses are booming one year and closing the next.
It is important to protect personal assets and starting a corporation offers owners that piece of mind.
Types of Corporations
General for Profit Corporation
A General for Profit Corporation is a separate legal and tax entity from its owners, directors and officers. Because this structure separates owners from the company, they are not
required to pay income tax on money the company makes. The owners are only required to pay taxes on the money they draw from the corporation. The corporation will pay tax on the
money it makes. For more information about General for Profit Corporations click here.
S-Corporation
An S-Corporation is a corporation that has elected S-Corporation tax status. The main difference with an S-Corporation is that all the profits of the company will pass through the
business to the shareholders (owners) to report with their individual income tax return. The corporation itself does not pay income tax like it does in a General for Profit
Corporation.
A new filed corporation has 75 days from the date of formation to elect this tax status with the IRS in order to be taxed accordingly. For more information about S-Corporations
click here.
Professional Corporation
A Professional Corporation is designed for companies providing professional services by the state. Each state has different regulations however, if the state has deemed a
corporation's business activity to be a professional services, then the business must file this structure instead of a General for Profit Corporation. Most states consider the
following professional services:
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Legal Services
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Medical Services
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Financial Services
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** Please note that the requirements vary state to state and prior to filing a professional corporation we encourage you to speak with a lawyer and your licensing board for
specific state requirements
For more information about professional corporations click here.
Non Profit Corporation
A Non Profit Corporation is exactly what it says, “Non Profit.” Unlike a C-Corp, Non Profits do not have stock, hence they have no owner. Once the Non Profit is filed with the
state, the next step is to file a federal tax exemption 501C with the IRS. This allows the company to become tax exempt. Under this tax code the company is not allowed to pay
dividends and if the company is ever dissolved all assets must be distributed to another non profit corporation. For more information on Non Profit Corporations
click here.
Corporate Structure
Whether you are filing a General for Profit Corporation, S-Corporation, or Professional Corporation the structure is the same.
Each structure will have shareholders, directors and officers.
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Shareholders – Owners of the company
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Directors – Are elected by the shareholders and jointly oversee the activity of the company. They are responsible for carrying out the orders of the shareholders.
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Officers – Are appointed by the directors and run the day to day activity. They are responsible for carrying out the orders of the directors.
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It is not uncommon to find that one person is an officer, director and shareholder of a corporation. There is no limit to the required amount of people that need to be involved,
as long as there is one person a corporation can be filed and that one person can be the only officer, director and shareholder.
Corporate Formalities
Due to the benefits and asset protection a corporation offers, there are formal requirement that need to be maintained to uphold the corporate veil. All corporations are required have
bylaws, hold annual meetings with the board of directors and shareholders, and record minutes. The company is only required to hold one meeting per year however it is up to the
company to decide on the amount of meetings to hold each year. Along with internal formalities, corporations are also required to complete state annual report requirements and
file taxes.
Taxation
Since a Corporation is a separate legal entity from officers, directors and shareholders it files taxes just like an individual. A corporation is subjected to double taxation;
pay income tax on the money the corporation makes as well as any dividends that are distributed to shareholders.
The only way to avoid double taxation is to file for S-Corporation status. All S-Corporations start off as a C-Corporation and then filed as an S-Corporation election with the IRS.
By doing this, all the profits and loses of the business will pass through the corporation to the shareholders.
The shareholders report the company income along with their individual tax returns avoiding double taxation of a C-Corporation.
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Packages starting at $99
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For more information on how we can help you file a Corporation for your business please call our office toll free at (888)-DoMyLLC (366-9552).
ORDER NOW!
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