Business

The Best Options for Incorporating a Business

There are several different ways of structuring a new business. One of these is to incorporate the business as a separate legal corporate entity under the incorporation laws of the state where the business is based. Incorporation protects the business owners from personal liability as once a corporation is formed, the corporation is responsible for all legal liabilities incurred. Another advantage is that the corporation will pay corporate income taxes at the corporate rate which are usually lower than the individual rate. If the corporation is sued, only its assets and not those of the corporation’s shareholders can be attached through a lawsuit. Important questions are listed below to help find the best options for incorporating a business.

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Can you incorporate online?

There are numerous online sites now which allow for incorporation of a business online. The first step is usually to list the state of incorporation and then to pick whether to incorporate as a LLC, a C Corporation, an S Corporation or a Nonprofit. Next, provide the requested documents and the site will submit the appropriate paperwork and then mail you your incorporation documents. Prices usually vary from $49 to $300 for the entire online process.

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Should Independent Contractors incorporate?

Depending on the individual’s situation, If an independent contractor becomes an LLC, this protects their individual assets in case of a lawsuit.

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What documents are needed to incorporate?

To register a company as a corporation, applicants will need among other items: articles of incorporation, articles of organization, organizational minutes and bylaws, an operating agreement, certificates of ownership for each owner and IRS form SS4 (Application for Employer Identification Number).

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Should a married couple with a business incorporate?

Usually the best option for a married couple who own a business is to form an LLC.

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Should the Business be an LLC or an S corporation?

An LLC (Limited Liability Corporation) is not the same as a corporation but allows for similar liability protection that a corporation provides. A LLC’s taxable income is taxed at the business owner’s or partnership’s individual tax rate. Some states like Alabama, New York, Texas and California levy a “capital values tax” or “franchise fee” on LLC’s for the right to limited liability. An S corporation or “Small Business Corporation” is a type of corporation under the laws of a state in which income is taxed at the individual shareholder level.

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Should the Business Incorporate as a standard “C” Corporation?

Corporations are entities formed by a group of investors and are differentiated by whether they issue stock or not. Each of the stockholders shares in the profits of the corporation and has a vote in how the corporation is run. Incorporation secures shareholder’s personal assets and has numerous tax advantages.

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What is the best state to incorporate in?

If the business’ home state is not desirable to incorporate in, generally the best states to incorporate in because of their state laws are Delaware, Nevada and Wyoming.

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What is the difference between a partnership and a corporation?

A partnership is a business arrangement where 2 or more people share in the profits, expenses and liabilities of a business.

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