| INCORPORATING 201 Key Incorporation Questions and Information DECISION MAKERS GUIDE TO INCORPORATING 1. Should you incorporate
in Delaware, incorporate in Florida, incorporate in Nevada,
form a California Corporation or incorporate in the state
where you do business?
2. Should you form an LLC or incorporate
and elect an S Corporation (S-Corp)?
3. Do you need an EIN for
your new incorporation or LLC? 4. How can you structure
an LLC to achieve the best tax shelter? 5. What is a Registered
Agent and DO YOU NEED ONE when you incorporate or form an
LLC? 6. Do you need an attorney
to incorporate or form an LLC? 7. How do you begin to
incorporate or form an LLC? 1. Should you
incorporate in Delaware, incorporate in Florida, incorporate
in Nevada, form a California Corporation or incorporate in
the state where you do business? You can incorporate in any one of the 50 states
or the District of Columbia rather than the state where your
business is doing business. A corporation is not required
to incorporate in the state in which it operates its business,
however, it is usually best to incorporate in your home state. Three major issues are involved when determining
the proper state in which to incorporate your business.
- The location of your corporation’s
facilities.
- The cost of incorporating in that state
versus the additional cost of incorporating in another state
and then qualifying that corporation to do business in the
state of operations – double incorporation costs.
- The advantage and disadvantages of the tax
impositions of one state versus or in addition to the other.
- Corporation related laws and judicial system.
For larger entities the choice
may be between the state of operations, Delaware and Nevada
or Florida. If it is a smaller corporation that primarily
works in one state, it is usually best to incorporate in the
state of operations. If for no other reason - The
cost of local filing is less than filing in another state
and then registering as a foreign corporation in the state
of operation. An out-of-state incorporation that qualifies
to do business in the local state may also be subject to taxes,
annual fees and even corporate laws in the state of incorporation
AND the operating state. Thus, the actual
advantage of incorporating in a state with very low or no
corporate income tax is not as great as it appears, if your
business must still qualify to do business in its state of
operations. We cannot provide legal direction about where
to incorporate. We can only point out some basic considerations.
You should consult your attorney if you are in need of legal
input about whether, where and in what form to incorporate.
We can only provide the administrative tools to perform the
actual incorporation or LLC formation. [top] [Order
Form] 2. Should you
form an LLC or incorporate and elect an S Corporation? An S Corporation eliminates double taxation.
However, the S Corporation does not have the flexibility of
an LLC in regard to the allocation of income to its members. An LLC may have an unlimited number of members.
However, ownership in an S Corporation is limited to no more
than 35 shareholders. Further, an S Corporation cannot have
shareholders who are C Corporations, other S Corporations,
certain trusts, LLC’s, partnerships or nonresident aliens. LLC’s are permitted to own subsidiaries
without restriction, while S Corporations are not allowed
to own 80% or more of another corporation’s shares. You can use our guaranteed services to form
a corporation or form an LLC, and save a substantial amount
of money you would otherwise pay an attorney. However, if
you need legal or financial advice as to the type of corporation
or LLC that would best suit your business needs, consult your
attorney or financial advisor. [top] [Order
Form] 3. Do you need
an EIN for your new incorporation or LLC? Once the LLC or Corporation has been formed
and is ready to do business, it is the time to apply for a
federal employer identification number (EIN).
Generally, any LLC or Corporation doing business within the
U.S. is required to have an EIN. In fact, the EIN
is necessary when filing tax returns and for establishing
bank accounts. [top] [Order
Form] A LLC or Corporation can receive an EIN by
completing and submitting IRS Form SS-4. However, you can
have FORM A CORP save you this tedious paperwork by having
Form-a-Corp complete and submit the necessary EIN form on
your behalf. [top] [Order
Form] 4. How can you
structure an LLC to achieve the best tax shelter? If an LLC wants to take advantage of pass-through
taxation, it must meet certain pre-established requirements.
To have pass-through taxation an LLC may not have more than
two of the following characteristics of a corporation:
- Limited Liability
- Unlimited Life
- Free Transferability of Interest
- Centralized Management
The LLC can have limited liability, and (if
the LLC is managed by managers), the LLC will have centralized
management-thus only two of the above attributes. [top] [Order
Form] 5. What is a
Registered Agent and DO YOU NEED ONE when you incorporate
or form an LLC? In all states, an individual or service company
must be responsible for receiving important legal and tax
documents. This service is provided by an "agent"
of the LLC or Corporation who is "registered" with
the state of incorporation. Thus, the term "Registered
Agent." The registered agent must have a valid
street address within the state of incorporation, and be available
during normal business hours to receive documents. The services performed by a Registered Agent
may include:
- Receiving and forwarding legal documents
- Receiving and forwarding tax and report forms
- Accepting and forwarding service of process
[top] [Order
Form] 6. Do you need
an attorney to incorporate or form an LLC? No, an attorney is not a legal requirement..
However, certain knowledge is necessary in order to properly
file the required incorporation or LLC documentation in the
designated state. You can use our guaranteed services to form
your corporation or LLC, and save a substantial amount of
money you would otherwise pay an attorney. However, if you
need legal or financial advice as to the type of entity that
would best suit your business needs, consult your attorney
or financial advisor. [top] [Order
Form] 7. How do you
begin to incorporate or form an LLC? After you decide that a corporation, an LLC
or an S corporation is best for your business, articles of
organization or articles of incorporation (charter or certificate
of incorporation in certain states) must be filed with the
proper state agency together with certain fees. FORM A CORP will provide all
necessary services to ensure that incorporation is completed
in the shortest period of time, with the highest degree of
skill and efficiency, and at the lowest cost. After the articles of organization or articles
of incorporation (charter or certificate of incorporation
in certain states) are filed and accepted by the designated
state, your LLC or Corporation must hold an organizational
meeting and adopt a proper Operating Agreement. The necessary
Operating Agreement recording material, LLC or Corporate Seal
and membership or stock certificates are all included in FORM
A CORP’s services. [top] [Order
Form] |
