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Corporate System.
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Corporate System provides incorporation
and LLC formation services
nationwide.
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- What are the different types of Corporations?
- What is a "C" Corporation?
- What is a Professional Corporation?
- What is an "S" Corporation?
- How is a Corporation formed?
- What do you name a corporation?
- How long does it take to form a corporation?
- Does a corporation need a registered agent?
- Does a corporation need a tax number?
- How is a corporation taxed?
- Can one person form a corporation?
- Are there directors or shareholders in a corporation?
- Who manages the corporation?
- Is there a difference between a filing for a profit corporation and a non-profit corporation?
- What are some of the advantages of incorporating?
- What are some of the disadvantages of incorporating?
- Is an accountant or attorney needed to incorporate?
In general terms, all corporations are separate legal entities. To form a corporation, Articles of Incorporation need to be filed with the state one wishes to incorporate within. Each individual state has its own particular
requirements, fees, taxes and responsibilities. In addition, each state has different types of corporate structures depending on the type of product or services rendered. You can select to become a "C" corporation, a Professional corporation, a Non-Profit corporation or an "S" Corporation. All Corporations, regardless of the type, are separate entities.
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Essentially a "C" corporation is a separate legal entity that is formed as a for-profit corporation. There are a certain number of shares of stock issued at incorporation and directors and officers are designated. The corporation, being a separate entity, pays applicable to taxes to both the state and federal government.
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For most purposes a professional corporation is essentially the same as a "C" corporation except that the corporation performs professional services such as medical services, legal services or accounting services. The designation is a state designation with any federal requirements being the same as a "C" corporation.
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An "S" corporation is essentially the same as a "C" corporation, but it has chosen
a special tax status with the Internal Revenue Service. They both have shares of stock, directors and shareholders. The special tax status allows the "S" corporation to pass through the profit or loss to it's shareholders. This eliminates the issue of double taxation. Not all states recognize the "S" status, but the majority does. To obtain the "S" status the corporation must file form 2553 with the Internal Revenue Service and have to make a similar election with some states.
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In order to form a corporation, Articles of Incorporation must
be filed with the required state fee.
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The name you select for your corporation must be distinguishable
form any other corporation within your state. The purpose of
this is to make sure your name is unique and will not be
confused with another company. When selecting a name for your
corporation, you must make sure it does not contain any type of
punctuation and must end with the words "Corporation,
Incorporated or the abbreviation Inc.".
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Each state has different time frames which it completes the
filing process. Some states take as little as an hour while
others can take several weeks. We have no control over the state
processing time. Some states offer an expedited service at an
extra charge.
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Yes. All corporations need a registered agent with a physical
street address within the state of formation. This allows a
location for any type of legal documents or tax documents to be
delivered to if they are returned from the company designated
address.
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All corporations need a Federal Identification Number. This is the same thing as an Employer Identification Number or an E.I.N.
and is used as an identification number for the corporation.
This number is obtained from the Internal Revenue Service by
filing Form SS-4. Some states use the same number but others
require filing for one with the particular state.
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A corporation is taxed as a separate entity. An "S" corporation has all the profits and losses passed through to the shareholders who are then taxed at a personal level.
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A corporation can be formed by one person. Each state varies as
to the amount of directors a corporation must have and other
requirements such as age and residency.
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Yes. The shareholders are the owners of the corporation. Each state requires a certain amount of directors/officers. Some only require one while others require three. A shareholder can also be a director/officer.
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A corporation is owned by its shareholders but is not necessarily managed by them. The shareholders elect directors who manage the corporation by appointing officers to handle the day-to-day activities. Most of your small corporations are managed by its shareholders.
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The differences with a profit and a non-profit corporation are
numerous with states and the Internal Revenue Service. Filing
fees for non-profits are generally much less than profit
corporations. Most states require that non-profits obtain the
non-profit status from the Internal Revenue Service prior to
registering with a states taxing agency. A non-profit
corporation is complex and is subject to different laws and
regulations than a profit corporation. Forming the non-profit
corporation is fairly simple and similar to a profit
corporation, but completing the requirements to function as a
non-profit can be difficult.
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- The biggest and most popular reason for forming a corporation is the liability protection it offers to its shareholders. For most purposes the individuals that own the corporation are not liable for the debts and obligations of the corporation.
- The corporations life is unlimited. A corporation does not cease to exist until it is dissolved with the state.
- Centralized management.
- Capital can be raised through the sale of the corporation stock.
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- First most is the issue of double taxation. Corporate profits are taxed as a corporation and then as dividend income when distributed to the shareholders.
- Federal and state laws have strict record keeping requirements.
- Due to the complexity of corporations, there is an increased possibility of needing professional assistance in regard to legal matters and taxation.
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Absolutely not. Any individual can process the required
documents with any state. One should make sure that they are
aware of and understand all the requirements of the selected
state before forming the limited liability company. If an
individual is unsure of, or does not understand the legal or
financial ramifications of forming a corporation, they should
seek the advice of an attorney or accountant. Corporate System. does not
offer any legal or accounting advice in the selection process.
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