Incorporation/Legal Structure

5 Reasons to Incorporate

Filing the articles of incorporation serves to strengthen and protect your businesses name. It prevents other businesses in your state from using the name of your business as their own. This in turn can improve marketing, branding and general name recognition.

Once you establish your business as its own entity, you gain legitimacy. You can do things with your business that are often more difficult for sole proprietors, such as raising funding, finding advisors, and partnering with other companies. Potential customers also appreciate dealing with registered companies they know will be around for a while.

Incorporating your business creates a separate legal entity for your business. Operating your business as a separate entity protects your personal assets, like your home, car, and savings. You will not be personally liable for the debts and judgements against your business.

Corporations continue to exist even if the founder or manager leaves the company. This is different than a partnership or sole proprietorship where a change in ownership can result in the destruction of the business entity. Incorporation grants stability and establishes a legacy, something that clients, shareholders and those you do business with can appreciate.

An incorporated business can be taxed separately from the owner, which is favorable in many cases. Self employment tax credits, health insurance for employees and other tax considerations may become available after incorporating.

How We Help

We work with you to determine the best structure for your business or organization. Once we determine the best business structure for you, our team of experienced professionals can file the Certificate of Filing, establish a registered agent, and assist in annual compliance reporting.

Types of Business Entities

Limited Liability Companies (LLCs)

  • Independent legal structures separate from their owners.
  • Help separate your personal assets from your business debts.
  • Taxed similarly to a sole proprietorship (if one owner) or a partnership (if multiple owners).
  • No limit to the number of owners.
  • Not required to hold annual meetings or record minutes.
  • Governed by operating agreements.

C-Corporations

  • Independent legal and tax structures separate from their owners.
  • Help separate your personal assets from your business debts.
  • No limit to the number of shareholders.
  • Taxed on corporate profits and shareholder dividends.
  • Must hold annual meetings and record meeting minutes.

S Corporations

  • Independent legal and tax structures separate from their owners.
  • Help separate your personal assets from your business debts.
  • Owners report their share of profit and loss in the company on their personal tax returns.
  • Limits on number of shareholders, who must be U.S. citizens or residents.
  • Must hold annual meetings and record meeting minutes.

Partnerships

  • Partners remain personally liable for lawsuits filed against the business.
  • Usually no state filing required to form a partnership.
  • Easy to form and operate.
  • Owners report their share of profit and loss in the company on their personal tax returns.

Sole Proprietorships

  • Owner remains personally liable for lawsuits filed against the business.
  • No state filing required to form a sole proprietorship.
  • Easy to form and operate.
  • Owner reports business profit and loss on their personal tax return.

 

Must Have Documents 

  • Bylaws include the rules and regulations that govern your corporation. Among a number of other details, corporate bylaws generally contain: the structure of the organization, the duties and responsibilities of a corporation’s members, details about the board of directors, information about when and where directors’ and shareholders’ meetings will be held, and a list of committees.
  • Limited liability companies (LLCs) are generally required to create an LLC operating agreement; a document that provides a framework for their operation. LLC operating agreements typically contain information about: members’ percentages of ownership, members’ rights and responsibilities
    members’ voting powers, allocation of profits and losses
    management details, and the fiduciary duties of members and managers.

Corporations and LLCs aren’t required to file their bylaws or operating agreements with the Secretary of State. Still, you should have them in place as soon as you’ve incorporated or formed your LLC, because these documents are often requested by:

  1. lenders, when you’re trying to obtain financing
    banks
  2. When you’re opening a business checking account
  3. Potential business partners or investors 
  4. Attorneys and accountants

Tax ID Number

The IRS generally requires the following types of businesses to obtain an EIN:

  • All corporations
  • All Limited Liability Companies (LLCs) with more than one member
  • Any business that hires employees, including sole proprietorships and single-member LLCs
  • Many nonprofit organizations, as well as trusts and certain co-ops, must also have an EIN.
  • If a business has changed its formation type or emerged from bankruptcy, it is typically required to apply for a new Employer Identification Number (EIN).

For many business owners, obtaining an EIN is one of the first things they do after incorporating or forming an LLC. Along with tax filings, businesses often need an EIN in order to open business checking accounts or establish accounts with certain vendors.

Sometimes you’ll see the Employer Identification Number referred to as a Federal Tax Identification Number (TIN) or a Federal Employer Identification Number (FEIN). As a general rule, it’s good for all businesses, with the exception of sole proprietorships without employees, to have an EIN.

Business Licenses

We Are Here To Help

Understandably, many business owners find identifying and applying for the right business licenses and permits to be a time-consuming, complicated, and even an overwhelming process.

State, County, And Local Government License & Permit Requirements

There are more than 150,000 filing jurisdictions across the country, all with their own requirements. Depending on your particular industry and where you operate, any number of licenses and permits may apply to your business. Examples of commonly required licenses and permits include:

• General business licenses
• Tax registrations
• Health permits
• State-issued occupational licenses
• Liquor licenses
• Lottery licenses
• Reseller’s licenses
• Zoning and land-use permits
• Health department permits

NOTE: Failure to obtain and renew the correct business licenses and permits can result in fines, notices, and forced closure of your business.