INCORPORATION
When you start a small business, you need to decide how to structure it. Each entity has its own set of pros and cons; which entity you choose will depend on your business, location and specific needs. Below is a list of the steps and the services we provide.
Step 1: Choose your Entity
| SOLE PROPRIETORSHIP | PARTNERSHIP | C CORPORATION | S CORPORATION | LIMITED LIABILITY COMPANY (LLC) | |
|---|---|---|---|---|---|
LIABILITY |
Unlimited personal liabiltiy | Unlimited for general partners Limited for limited partners | Shareholders generally not personally liable beyond their investment | Shareholders generally not personally liable beyond their investment | Members generally not personally liable beyond their investment |
FORMATION |
None / DBA | File Certificate of Limited partnership with State | File Article of Incorporation with State | File Article of Incorporation with State + File "S" Election | File Article of Organization with State |
ACQUISITION |
Limited to what proprietor can secure | Easier than sole proprietorship since shared by partners | Acquired by issuing stock or bonds | Acquired by issuing stock | Subject to operating agreement |
TRANSFER |
Difficult | Difficult unless unanimous consent | Readily accomplished through stock transfer | Readily accomplished through stock transfer, but can't transfer to foreign or entity shareholders | Absent agreement otherwise, need unanimous consent |
TAX FILING |
Schedule C with Form 1040 | Form 1065, Distributes K-1s to partners | Form 1120 | Form 1120S, Distributes K-1s to shareholders | Single Member: Schedule C with form 1040 - Multiple member: Form 1065, Distributes K-1s to member |
TAXATION |
Directly to owner | Pass through to partnership | Taxed at corporate level and taxed again to shareholders when dividends are distributed | Pass through to shareholder | Pass through to members |
SE TAX |
Subject to self-employment tax | Subject to self-employment tax | Only Salary subject to self-employment tax | Only Salary subject to self-employment tax, shareholder distribution are not | Subject to self-employment tax |
PROS |
Independence, flexibility, minimum red tape | Chance of business success enhanced if right combination of partners | Limited liability, any number of shareholders | Limited liability, no double taxation | Combines limited liability of a corporation with the pass through taxation of a small proprietorship |
CONS |
No legal separation between owner and the business | Tax liabilities passed to individual | government regulation and red tape, double taxation | Not every corporation qualifies for S Corp. | Filing and other fees may be higher than for a corporation |
Step 2: Search available business name and reserve name
Step 3: Register with State (1-2 Weeks)
Step 4: Apply for company EIN number with IRS
Step 5: File statement of information
Step 6: Complete the Corporate Kit
Information needed to Incorporate:
- Provide 2-3 desired business name
- Shareholder name, address, and SSN (if foreginer as shareholder, copy of passport)
- Name of President, CFO, Secretary, and Directors
- Type of business
- Products or services provided
- Company address
- Each shareholder's percentage
Services we provide:
- Register with State
- Apply EIN with IRS
- Filing Statement of Information
- By law
- Minutes
- Stock Certificate
- Seal
- Services Agent
- Virtual Office
- Open Bank Account
