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What are the Main Differences between an LLC and an S-Corp?

What Is a C-Corporation?

What Is an LLC?

What Is an S-Corp?

Which Type of Company Incorporation is Right for You?

 

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Which Type of Company Incorporation is Right for You?

Maybe when you first started out, a partnership or sole proprietorship was ideal. Your business was small, your exposure to legal liability may have been low because most of your clients or customers came to you via referrals from friends and family. But an organization's growth can mean both opportunity --- and potential headaches.

Your firm having survived its infancy, it might now be time to branch out to doing business in other states. You might have more employees and wish to offer them benefits while taking advantage of a tax deduction. Offering benefits might even result in attracting better quality employees. You might even want to raise capital by means other than personal assets or business loans. For these and other reasons, incorporating your business can be a good choice.

Once you've decided that you want to incorporate, you still have at least one more question to answer: "Which type of company incorporation is right for you?"

As an owner, you have two types of corporate structure to choose from. The C-corporation is what most folks think of when they think of incorporating. A C-corporation must accomplish a list of administrative steps to establish and maintain its status, among them the filing of a number of IRS tax documents throughout the calendar year. An S-corporation must take the same set of administrative steps but does not have to file a corporate tax return. Instead, S-corp owners report any profits or losses on their personal tax returns.

With both C-corp and S-corp structures, you establish your company as a tax and legal entity separate from you and any other owners. Creating this entity acts to protect you from liability in the event that you are sued or your company goes into debt.

Whether you select S-corp or C-corp status, incorporating your business requires the completion of a good deal of documentation that must be filed according to somewhat strict procedures. To make things even more complicated, each state sets its own rules relative to incorporation procedures. Hiring a lawyer who is familiar with your state's rules, as well as with federal statutes and provisions, is advisable. Consulting with a business tax professional before starting the process is also a good idea.

To begin the incorporation process, you must file articles of incorporation with your state's Secretary of State. In addition, you have to craft and record a set of company by-laws. By-laws do not need to be filed with any official body, but must be kept with company files. Next, you have to schedule -- at least once per year -- shareholder and board of directors meetings. When meetings are held, minutes must be recorded and kept on file. Establishing a business name with state and/or local authorities, complying with licensing regulations and obtaining a federal tax ID number are also part of the process.

If you choose the S-Corp route, you need to be sure your company meets IRS requirements for "Subchapter S" status. These requirements are routinely updated, so checking in with a tax professional is encouraged. If you do indeed qualify, you must have your shareholders vote to approve S-corp status. Once you have established S-corp status, you'll be able to sidestep the liability concerns of a sole proprietorship or partnership, as well as the cumbersome tax filing requirements of a C-corporation.

Each incorporation choice boasts its own positives and negatives. When it comes to choosing between the two, your business objectives -- tempered with sound legal and tax advice -- should inform the process.

Almond grower: Many benefits from whole orchard soil incorporation

The loss of more than half of the biomass power generation capacity in California has left growers with few disposal alternatives for wood generated by whole orchard removals. While piling and burning pulled trees has been the standard practice ...

Published:  Wed, 15 Nov 2017 14:34:00 GMT



Freeport celebrates 125th anniversary of village incorporation

Freeport celebrated the 125th anniversary of its incorporation as a village last month, kicking off a year of history-themed events. Residents voted 214 to 132 to be incorporated as a village in what was then part of Queens County on Oct. 18, 1892, at the ...

Published:  Tue, 07 Nov 2017 08:15:00 GMT



Apple Valley visionary remembered: Dick Pearson credited with starting incorporation movement

APPLE VALLEY - Thirty-three candidates vied for the seats that would make up the first Town Council, but among the favorites was the man credited for starting the movement that led to incorporation. When votes from the Nov. 8, 1988, election were finally ...

Published:  Mon, 06 Nov 2017 23:53:00 GMT



INCYTE CORPORATION (NASDAQ:INCY) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

INCYTE CORPORATION (NASDAQ:INCY) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal YearItem 5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year. On November15, 2017, the Board of Directors (the ...

Published:  Fri, 17 Nov 2017 08:09:00 GMT



Infibeam Incorporation executes agreement with Adani Wilmar

Infibeam Incorporation has executed an agreement with Adani Wilmar to develop, integrate, implement and maintain an online ecommerce and mobile platform with integrated logistics framework for on demand customer purchase of Adani Wilmar Products.

Published:  Tue, 07 Nov 2017 21:07:00 GMT



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