Whether you are a first time entrepreneur or a seasoned business owner, deciding whether to incorporate and what type of entity to form is a critical step which should require a consultation with an attorney. The first question should be whether or not you need to incorporate; or alternatively, should you form a different type of entity other than a corporation? There are many advantages and benefits for a sole business owner to form an entity. So which type of entity is best for your business?
There are several different types of corporate entities, each having its own unique benefits and requirements. Unlike sole proprietorships, corporations must be filed with the Secretary of the State. Below are the most typical types of corporations.
C-Corporation (General for Profit)
Limited Liability Company (“LLC”)
Limited Liability Partnership (“LLP”)
Professional Corporation (“PC”)
We have formed hundreds of LLCs and corporations for clothing design companies, entertainment production companies, real estate LLC’s, LLC protection for actors, technology companies, restaurants, and for many additional industries and purposes.
Knowing which entity is right for you will depend on your business and desired tax status. We provide consultations regarding the best entity given your needs. For differences between LLC’s and S-corporation, see the following article.
Why Should I Incorporate and What Are the Benefits?
As taxpayers, we are all aware of how expensive our yearly tax requirements can be. One of the greatest advantages the US government has provided is the opportunity for tax deductions related to the corporation. For example, unlike partnerships or sole proprietorships, health, life, and disability insurance are deductible by the corporation. If properly structured, other expenses include automobile insurance, education benefits, travel and entertainment expenses may be deducted as well. These expenses are subject to strict limitations for sole proprietors (if deductible at all). You may also eliminate self-employment taxes and lower social security tax and Medicare tax payments are well.
Protection from Personal Liability
Another significant reason for incorporating is to maximize protection from personal liability. The shareholders of a corporation are generally not liable for the obligations of the corporation. For example, creditors of a corporation may seek payment from the assets of a corporation, but not the assets of the shareholders. Therefore, business owners may engage in business without risking their homes or other personal property.
Our LLC or Corporate formations include:
Legal consultation with Mr. Cohen;
Filing Articles of Incorporation or Organization;
Drafting and customization of Bylaws, Minutes, or Operating Agreements;
Filing and pay for Statement of Information for first year;
Filing of Statement Address Verification;
Filing with the IRS your Federal Tax Identification Number;
S Election filing with IRS if requested;
Corporate kit with seal and stock/membership certificates;
Michael N. Cohen as Agent of Service of Process for first year; and
Memo regarding upkeep and care of the corporation or LLC.
Our firm also provides the following corporate services:
Venture Fund and Angel Financings
Asset Sales and Purchases
Shareholder, Stock and Equity agreements
Strategic and IP Alliances
Mergers & Acquisitions
Contract review and negotiation
Non-disclousre (NDA), and confidentiality agreements