In some states, only professionals (required to have licenses to do business) are allowed to form a Limited Liability Partnership and, in addition, some states have special insurance requirements. Limited Liability Partnerships are similar to LLC’s ….Incorporation Knowledge Center
Business choose Florida as one of the top few states to incorporate. Florida has become one of the most desirable states in the country in which to conduct business. The State consistently leads the nation in new business incorporations. With one of the largest supplies of business parks, an advantageous business tax system, transportation availability, 14 foreign trade zones, an abundance of electrical power, and a large population of skilled human resources, Florida provides everything that a business requires to function.
New businesses are registered in Florida each year. Most of these businesses are incorporated as Florida corporations. In 1997, over 100,000 new Florida corporations were formed. The number of businesses that registered as limited liability companies, on the other hand, were less. There was only a little over 2000 Florida LLCs in 1997.
The substantial difference in the number was due to Florida’s LLCs laws. A 5.5% income tax was applied to every Florida LLCs. In addition, start up fees for forming an LLC in Florida is higher than incorporating as a Florida corporation.
The LLC law was changed in 1998. 5.5% income tax was eliminated. LLCs start up fees were lowered. Interests earned in LLCs were protected from any claims filed by creditors. This drastic change in the Florida LLCs law has prompted a increase in the number of businesses registration as LLCs.
Should you form an LLC or incorporate and elect an S Corporation?
An S Corporation eliminates double taxation. However, the S Corporation does not have the flexibility of an LLC in regard to the allocation of income to its members.
An LLC may have an unlimited number of members. However, ownership in an S Corporation is limited to no more than 35 shareholders. Further, an S Corporation cannot have shareholders who are C Corporations, other S Corporations, certain trusts, LLCs, partnerships or nonresident aliens.
LLCs are permitted to own subsidiaries without restriction, while S Corporations are not allowed to own 80% or more of another corporations shares.
You can use our guaranteed services to form a corporation or form an LLC, and save a substantial amount of money you would otherwise pay an attorney. However, if you need legal or financial advice as to the type of corporation or LLC that would best suit your business needs, consult your attorney or financial advisor.
General Incorporation Requirement to form a LLC:
A LIMITED LIABILITY COMPANY is a hybrid form of business entity combining some of the attributes of a corporation with the status of a partnership.
Any entity that transacts business in Florida as a limited liability company is required by Florida Statutes to file Articles of Organization or an application for authorization with the Division and pay the filing fee. These documents must be typewritten or printed legibly in the English language. The professional advice of your legal counsel to ascertain exact compliance with all statutory requirements is strongly recommended.
All limited liability companies must file a Uniform Business Report with the Division each year between January 1 and May 1 and pay the filing fee. Failure to file will result in administrative dissolution of the limited liability company or loss of authorization to transact business in Florida as a foreign limited liability company.
Deciding to incorporate was one of the most important business decisions youve had to make. You most likely chose the incorporation type that offered you the greatest limited liability protection and other advantages. But, did you know that courts can take away limited liability protection if it is determined you have not been operating your corporation properly? This is called piercing the corporate veil.
How strong is the veil of protection around your business? Not sure? Its not too late to protect your business. Here are some things you can do to get your corporate affairs in order.
1. Follow the rules and regulations closely. Adhere to state requirement regarding the organization and operating a corporation.
2. Hold regular corporate meetings with shareholders. Be sure to keep records of meeting activities, minutes and decisions made.
3. Keep good records in a corporate book. Use this book to keep incorporation records, maintain meeting minutes and shareholder information.
Protect the business advantages garnered through incorporation. Need a little help? Learn more about the corporate veil and protecting your corporate structure in the MaxFilings Incorporation Knowledge Center. Also, find out how MaxFilings Corporate Kits can help you secure your corporate status.
By ALEX PHILIPPIDIS
Eleven years after New York state first extended to startup business owners the liability protections of corporations, entrepreneurs are increasingly taking advantage of them, judging by five years worth of new-business filings.
The number of doing-business-as filings dipped 20 percent between 2000 and 2004, when 3,931 DBAs (doing business as) were recorded by the county clerk’s office.
No similar dip is evident, however, in the new corporate filings recorded by the state Department of State. During the same five-year period, the number of corporations, limited liability companies (L.L.C.s), limited partnerships and limited liability partnerships remained steady, a combined 4,947 filings processed last year - 27 more than in 2000.
Nationwide, the number of new businesses dipped less than 1 percent between 2000 and the most recent available year of 2003, when 572,900 new businesses were recorded.
John Tolomer, senior vice president and Westchester/Connecticut marketing manager for Commerce Bank, which operates five Westchester branches, said many entrepreneurs are wising up to the tax advantages of corporate filings. L.L.C.s and subchapter S corporations allow earnings to flow to owners and are taxed once at their personal income tax rate, versus the dual taxation of traditional corporations.
A small business resource that you’ll want to check out, www.Business.gov is the official link to the U.S. government. Linked right from the home page, you’ll see essential topics like this:
- Find Small Business Grants and Loans
- Comply with Employment and Labor Laws
- Start a Home-Based Business
- Get Info for Restaurants and Food Businesses
- Buy Government Surplus Property for Your Business
There’s also a handy “permit finder” that lets you seek out permit information for your state and type of business.
See what’s there for YOUR business: www.business.gov
Pondering a corporate name change? Don’t modify those articles of incorporation just yet. There’s another way to change the name of your business without a corporate name change. This alternative is often overlooked and is as simple as modifying or renewing your business license.
Depending on the rules of your state incorporation office and those of the licensing city or county, changing the operational name of your business may be as simple as using a DBA, alternative business name. Take a look at your business license application or business license. If you see a line for DBA or Doing Business As following the line for Business Name, you may be able to place your DBA under your corporate veil. Contact your local business licensing office to find out if you can use a DBA and about other documentation that may be required. MaxFilings can also help you save time and money by filing your DBA for you.
Dont forget to visit the MaxFilings Knowledge Center for more incorporation information online.
Corporation
A corporation is a separate legal entity that exists independently from its owners. A corporation is created and comes into existence when articles of incorporation (charter or certificate of incorporation in certain states) are filed with the proscribed fees, and accepted by the proper state authority
S Corporation
An S Corporation is merely a corporation which has elected a special tax status with the federal government. It was created for smaller business owners. The special tax treatment permits the income of the corporation to be treated like the income of a partnership or sole proprietorship in that the income is “passed through” to the shareholders.
In order to be considered an S Corporation, the stockholders of a properly filed corporation must elect such status within 75 days of formation for the current tax year, or at any time during the preceding tax year. This election is made by filing Form 2553 with the IRS. To qualify for S Corporation status:
Limited Liability Company
A Limited Liability Company (”LLC”) is a separate legal entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation. An LLC is created and comes into existence when articles of organization are filed with the proscribed fees, and accepted by the proper state authority
STRUCTURE OF EACH
Corporation
A corporation is owned by stockholders. While stockholders do not directly manage the corporation, they influence corporate decisions through indirect actions such as electing and removing directors, approving or disapproving amendments to the articles of incorporation and voting on important corporate decisions.
The members of the Board of Directors are responsible for managing the affairs of the corporation. Usually, directors make only major business decisions, however they supervise and appoint officers who make the
day-to-day business decisions of the corporation.
Officers are responsible for the everyday management of the corporation.
Typically, officers are appointed directly by the Board of Directors.
A stockholder may serve on the Board of Directors and also be an officer of the corporation. In fact, in most states one person is enough to form a corporation, and that person can be the sole officer, director and stockholder
S Corporation ( See DESCRIPTION of S corporation and Corporation above)
An S Corporation follows the same structure as a regular corporation. However, an S Corporation is usually owned and run by a small number of individuals or family members (one or more). Thus, while the above structure applies, the same person or related persons or a small number of persons MAY control all positions.
Limited Liability Company
An LLC is owned by its members. The members of an LLC are like partners in a partnership or shareholders of a corporation. A member will more closely resemble a shareholder if the LLC utilizes a manager or managers, because under that situation the members will not participate in the management of the LLC. However, if the LLC does not utilize managers, then the members will more closely resemble partners because they will have decision making powers in the LLC.
The member’s ownership in the LLC is represented by their respective “membership interest”, in the same manner as a partner has an “interest” in a partnership or a shareholder has stock in corporation.
Number of Members: Most states require LLC’s to have at least two members. The states which allow one member LLC’s are: DE, ID, MO, MN, NY, TX and VT.
Read more Incorporating your Business
FormACorp.com: Online Incorporation Services
Are you considering changing the name of your business? Be sure to the check the corporate name change rules and regulations in your state. In many states, a corporate name change requires the submission of new/revised articles of incorporation, a copy of meeting minutes and the board vote and additional fees.
Additionally, you may be required to publish notification of your corporate name change in your countys legal organ (newspaper). State corporate name change requirements may dictate that the notification run in the newspapers legal section from two weeks to a month. Your county newspaper also may require a modest fee for publishing your notification of corporate name change.
You can learn more about the rules and regulations of operating a corporation in the MaxFilings Incorporation Knowledge Center.
A business owner IS NOT required to incorporate in the state where the company resides. Selecting the proper state to incorporate is one of the important decisions a business owner makes. Business can choose to incorporate or form an LLC in any of the 50 states or the District of Columbia. There are benefits to incorporating your business in certain states. One of the most important benefits is “tax benefits”. Some of the major states that receive a large number of incorporation are:
– Nevada
– Florida
– Delaware
– Location of your company
– A cost analysis comparing the cost of incorporating in the state of operation versus the costs of qualifying to do business as a foreign corporation in the state under consideration.
– The advantages and disadvantages of each state corporate laws and tax structure.