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Business means continuity an there is always a starting point of an incessant process. Thus, a business is no exception and it also has a starting point. This point starts with INCORPORATION.
In US, a Business entity can be incorporated under different types:
Sole Proprietorships – also known as a sole trader, or simply proprietorship. Owned and run by one individual and where there is no legal distinction between the owner and the business. They are inexpensive to form, easy to dissolve and generally have no tax aspects, since profits and losses of the business are simply part of the owner’s personal income and the company is disregarded for tax purposes all profits and all losses accrue to the owner. All assets of the business are owned by the proprietor and all debts of the business are the proprietors.
Partnerships – are also relatively inexpensive to form. Partnerships are formed by two or more persons or any business entity who make an agreement to share profits and losses. Each partner has joint and several liabilities to the partnership which means any particular partner can be liable to pay entire debts of the partnership irrespective of the extent of participation in Profit and Losses or capital contribution into the partnership. Taxation is more complex, but the partnership itself pays no taxes; it is only required to file an informational return to the government to report what the profits and losses of the partnership were and how these were allocated to the partners. A partnership ceases to exist in case of the death or bankruptcy of a partner or when they decide to terminate the partnership.
Limited Liability Companies or LLCs -Such type of entities are highly flexible, and can be used for a various types of nature of business. The members (equivalent to shareholders or partners) can, but need not, have limited liability; can, but need not have, managers (equivalent to directors and officers) and can elect to be taxed either as corporations, or as partners (if they have two or more members) or be disregarded for tax purposes like a sole proprietorship. Depending on state law, an LLC can have the same limited liability for members as a corporation, or have some members with limited liability and some without limited liability or no limited liability for any members. Unlike corporations, some States require that their LLC’s designate a date in the future at which the LLC will automatically dissolve. Some States also require that if a member dies, goes bankrupt or meets some other calamity the remaining members of the company must either dissolve or vote to continue.
Corporations - In comparison to the above two, corporation are more complex. By forming a corporation a NEW legal entity is created which is separate from its owners. Therefore, its life is independent of the life of shareholders. Depending on state law, a corporation can be owned by just one person and have just one director and officer. The shareholders elect directors to set the policies of the corporation and represent their interests. The directors appoint the officers of the corporation to manage day to day operations. Corporations are legally required to follow more formalities than any of the other entities, including annual meetings of the shareholders and directors, as well as board approval of most significant acts by the corporation. Taxation of corporations is much more complex.
mytaxfiler® is the right place to find the solutions for entity formation.
Corporations and LLCs are excellent options for entrepreneurs looking to minimize their personal liability and build greater reputation, credibility and brand name. There are different types of entities and each type of entity offers distinct tax and business advantages. GVA can help you form an entity (C Corporations, Subchapter S Corporations, Non Profit Corporations, LP, LLP, or LLC) in any of 50 US States!
What are the advantages of incorporation of Formation of Limited Liability Company?
Regardless of their size, all businesses can benefit from incorporating. Advantages of forming a corporation or Limited Liability Company (LLC) include:
Should My Business Incorporate or Form an LLC?
Selecting the entity type varies on case by case basis. Our associates at GVA, Inc. are well trained to help you make the proper selection.
To explain the difference between two entity types in brief, Corporations and LLCs are both separate legal entities (business structures) that enjoy certain protections under the law and important benefits. Most people form a legal business structure to safeguard their personal assets. Incorporating, or forming a Limited Liability Company (LLC), allow you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability.
We offer these services in addition to Entity formation –
Contact us by writing to firstname.lastname@example.org and one of our associates will get in touch with to understand your requirements in detail.