The most important reason to incorporate is that it limits your personal liability. For this reason it is considered an essential element to starting a new business. In todayâ€™s business environment it makes sense to protect your personal assets from those who may wish to bring a lawsuit against your company.
It is not necessary to employ the services of an attorney to form your corporation or LLC. You can legally file the formation documents on your own or through someone of your choosing who acts as the incorporator or organizer and who will prepare your documents with the information you provide. However, we urge anyone who may need more guidance to consult their tax or legal advisor regarding their business formation.
Parcorp Services was established to provide complete and affordable formation services to small businesses. Our Certified Corporate Paralegals and experienced professionals can provide you with assistance throughout the entire process. We also provide additional business support services, software, books and other products so your business can adapt as it grows. We invite you to compare our services and fees to those offered by other companies. We simply provide a better service at a lower cost.
A corporation is a separate legal entity from the individuals who own and operate it. It can hold title to real property, it can borrow money, it can sue or be sued and enjoys constitutional rights and protections similar to those of an individual. In order to maintain this separation of the individual owners from the corporation simple organizational and operating procedures must be followed.
The organizational structure of a corporation consists of three levels, namely Shareholders, Directors and Officers. The Shareholders are the owners of the corporation. The Directors manage the affairs of the corporation and are responsible for creating and implementing general business policies of the corporation. The officers of the corporation handle the day-to-day operation of the business. In most states one individual can act as the sole Shareholder, Director and Officers of the corporation.
A Limited Liability Company is a unique business entity which combines the limited liability protection of a corporation with the simplicity and pass-through tax benefits of a partnership, sole proprietorship and an S Corporation. Like a corporation it is a separate legal entity from the individuals who own and operate it.
The members of an LLC are the owners of the business. As a member you invest in the LLC in exchange for a percentage of ownership interest. Generally the members also act as the LLCâ€™s managers and are involved in the day to day running of the business, this is considered a member-managed LLC. In some cases specific managers are designated to run the business which is referred to as a manager-managed LLC.
Most states require that an agent be registered with the state to receive governmental and legal correspondence. The agent must have a physical address within the State of incorporation and be of legal age. An officer, director, employee or even a shareholder may act as the registered agent if they meet the above requirements. The registered agent may also be served legal summonses in a lawsuit and you may want to avoid having these documents served at the business location or a home residence. For this reason Parcorp Services offers registered agent services at affordable annual rates.
To incorporate with Parcorp Services simply complete our on-line order form or call our office and give your information to one of our agents. We will prepare the formation documents and forward them to the Secretary of State along with the required filing fees. The entire process is handled quickly and efficiently so you can concentrate on your business activities.
The time frame for incorporating depends on the state in which you are incorporating and the type of service you request. With our Expedited Service we can incorporate a business within three to five business days. Same day service is available in some states. Standard filing generally takes between three and four weeks.
In general incorporating in the state in which the business is located is the most practical and least costly option for a small business. Other considerations may include whether or not the business will have multiple locations or if there are any state laws that apply to your particular business activity. However, we urge anyone who may need more guidance to consult their tax or legal advisor regarding their business formation.
Many states have revised their corporate laws to include many of the benefits allowed Delaware corporations. Furthermore, most of the advantages of incorporating in Delaware apply to large publicly traded corporations. The most notable advantages to incorporating in Delaware include the following:(I) favorable franchise tax rates, (ii) nonresident shareholders are not subject to Delaware taxation, and (iii) Delaware courts liberally interpret corporation laws allowing favorable and more predictable decisions for corporations.
You should be aware of the added expenses associated with incorporating and maintaining a corporate presence in that state. If you incorporate in another state such as Delaware, you will still need to be authorized or qualified to do business in the state or states where you will actually be conducting your business. The cost associated with qualifying in a state is usually more expensive than the cost of incorporating in that state. In addition, you will be required to maintain a registered agent in the state of incorporation and may have to pay annually for this service. These expenses can be eliminated by incorporating in the state where the business will be located.
An LLCâ€™s flexibility and ease of operation make it very favorable to small businesses. An S-Corp, while having similar pass-through taxation benefits, does not allow for flexible distribution of profits or losses. Further, S-Corps must maintain statutory corporate formalities.
An LLC can have multiple owners, without restrictions on type or classification, and may offer several different classes of ownership interest. An S-Corp is restricted to 75 shareholders, with restrictions on type and classification, and can offer only one class of stock.
While the LLC and S-Corp both provide limited liability protection and similar pass-through tax advantages, the LLC has far less restrictions or formalities it must adhere to. For this reason many small business owners are now forming as, and enjoying the benefits of a limited liability company. We urge anyone who may need more guidance in choosing which entity is best suited for their business to consult their tax or legal advisor.