We can help you decide the right corporate structure for your company
What Is A Corporation?
Simply put, a corporation is a legal entity that separates the business from the owners. Think of it as establishing a “personhood” for your business.
A corporation enjoys many of the rights and responsibilities that a person would enjoy such as the ability to enter into contracts, own assets, borrow or loan money, hire employees, sue or be sued, pay taxes and more.
Why Set Up A Corporation?
Running a business means you deal with risks. As much as we all try to do a good job, debt, accidents and bad things can happen to even the best of us. Forming a corporation helps you protect your personal assets, but here are other benefits of forming a corporation:
Limited Liability– having a corporation means the business owner is not personally responsible for the debts and liabilities of the business. This means creditors can not come after assets like your home, car or other assets to pay off business debts.
Tax Advantages– as a sole proprietor, you cannot write off health insurance premiums or take advantage of other tax benefits that a corporation can give you. There are many tax benefits to incorporating that we’d be happy to discuss with you.
Increased Credibility– being incorporated helps your business have more credibility in the eyes of your customers, vendors, partners and employees.
Raising Capital– Banks and other institutions are more willing to lend money to corporations than individuals. This is especially true when considering small business loans.
There are many other advantages to having a corporation that could be beneficial for your business and industry. Contact us today for a free consultation.
Different Types of Corporations
An individual can create a corporation alone or with a group of people, and the corporation can be for-profit or not-for-profit. Not-for-profit organizations fall into the category of charities and usually are focused on helping society in some fashion whereas for-profits companies are established to generate a profit. Revenue generated for not-for-profit corporations are typically used to further the cause of the organization.
If you are running a business currently but you are not incorporated, this is called a sole proprietorship which is not considered to be a separate business entity and offers no liability protection.
The Four Main Types Of Corporations:
C Corporation– A C-corp is one of the most common types of corporations and a corporate structure that provides some of the strongest protection from personal liability. There are fairly extensive but straightforward record keeping requirements. This is often a good choice for medium or higher risk businesses that need to raise money or may eventually go public.
S Corporation– An S- corp gives the owner the corporate structure that reduces liabilities and also avoids the double taxation of a regular C corp. Essentially an S corp allows more profits and losses to be passed through to the owner’s personal income whereas a C corp does not allow this.
LLC– A limited liability company is one of the most flexible corporate structures in that it provides protection of the owner’s personal assets while still allowing profits and losses to pass through to the owner’s personal income without facing corporate taxes.
Non-profit– this is a corporate entity that typically has a single minded cause. Religious organizations, charities and other businesses form non-profits. Some people think that the goal of a non-profit is not to make money, but many, many non-profit organizations are extremely profitable. The main difference is that the profits are typically put back into the operations, expansion and future plans of the organization.
Professional Accounting Services
Whether you are just starting a business or you’ve been conducting business for awhile, there are standard steps that are necessary to incorporate.
If you’re just starting out, it’s important to choose a good name for your corporation. This can feel like naming a child. It seems like a simple thing to do, but it’s more difficult than you think.
We always suggest you go to the Secretary of State website and search to see if there is a business that is already using your name. Depending upon which corporate structure you want to create, the rest of steps may include:
- Write Articles of Incorporation & File Them With The State
- Create Corporate Bylaws
- Draft A Shareholder’s Agreement
- Establish Corporate Minutes
- Issue Stock Shares
- File For An EIN (Employer Identification Number)
- Obtain Any Necessary Licenses & Permits (Depending upon the business & industry)
- Start enjoying your new corporation!
The Process Of Setting Up A Corporation Can Be Complex. We’ll Do It For You.
Starting a business can be courageous enough. Dealing with the complexities of setting up a corporation can get overwhelming quickly. We provide corporation setup services that make the entire process easy.
Let us help you create the business you’ve always dreamed about. Contact us today for a free initial consultation. Let us help you realize your dream of becoming a business owner. Call us and let’s talk about making this dream come true.
Let’s get your business started!