How to form an S Corporation?

S Corporation

An "S-Corporation" is a regular corporation that has between 1 and 100 shareholders and that passes-through net income or losses to shareholders. An S Corp is a corporation that elects to be treated as a pass-through entity (such as a sole proprietorship or partnership) for tax purposes. Since all corporate income is "passed through" directly to the shareholders who include the income on their individual tax returns, S Corporation are not subject to double taxation.

To Read More: How to form an S Corporation?

Source: Business Documents Filing In All 50 States

Why should I Incorporate?

Incorporating is one of the best ways a business owner can protect his or her personal assets. Most people choose to incorporate solely for this reason, but there are other advantages as well. For example, the corporate business structure saves you money in taxes, provides greater business flexibility, avoids audit chances, better itemization and lets you more easily raise capital.

There are many advantages to incorporate your business. Liability protection of your personal assets is one of the primary reasons why a small business will form a corporation. Incorporating helps to separate your personal assets from that of your business. A corporation is a legal entity that exists separately from its owners or shareholders. Typically, shareholders are not liable for the debts and obligations of the corporation or from any litigation where the corporation is the defendant in most cases. In a partnership or sole proprietorship, the creditors can go after the owner's personal assets if the company assets are not enough to settle a claim in most cases.

In company registration or corporation formation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions for federal income tax purposes; a Corporation is recognized as a separate taxpaying entity. Corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

The profit of a Corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.

To Read More : Why should I Incorporate?

Source : Business Documents Filing in 50 States

What is Limited Liability Company (LLC)?

The Limited Liability Company or LLC is not a partnership or a corporation. Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. An LLC is a distinct type of business that offers an alternative to partnerships and corporations, by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.

Limited liability companies, or LLCs, are becoming more and more popular, and it's easy to see why. The Limited liability Company (LLC) provides the desired limited liability while avoiding some of the drawbacks (like double taxation and excessive paperwork). They combine the personal liability protection of a corporation with the tax benefits and simplicity of a partnership. In addition, they're more flexible and require less on going paperwork than corporations.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There may be unlimited number of members. Most states also permit "single member" LLCs, those having only one owner.

Member owned LLCs are analogous to partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes a manager or managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in the decision making of the company.

A member's ownership of an LLC is represented by their "interests," just as partners have "interest" in a partnership and shareholders have stock in a corporation.

To Read More : What is Limited Liability Company (LLC)?

Source : Business Documents Filing in 50 States

What is Limited Liability Company (LLC)?

The Limited Liability Company or LLC is not a partnership or a corporation. Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. An LLC is a distinct type of business that offers an alternative to partnerships and corporations, by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.

Limited liability companies, or LLCs, are becoming more and more popular, and it's easy to see why. The Limited liability Company (LLC) provides the desired limited liability while avoiding some of the drawbacks (like double taxation and excessive paperwork). They combine the personal liability protection of a corporation with the tax benefits and simplicity of a partnership. In addition, they're more flexible and require less on going paperwork than corporations.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There may be unlimited number of members. Most states also permit "single member" LLCs, those having only one owner.

Member owned LLCs are analogous to partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes a manager or managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in the decision making of the company.

A member's ownership of an LLC is represented by their "interests," just as partners have "interest" in a partnership and shareholders have stock in a corporation.

To Read More: What is Limited Liability Company (LLC)?

Source: Business Document Filling in All 50 States.

What is a Corporation?

Shareholders are protected from the corporation's liabilities."Double taxation" frequently occurs, because the corporation is taxed on its profits, and shareholders are also taxed on the distributions they receive, such as profit sharing payments or dividends.

To Read More : What is a Corporation?

Source : Business Documents Filing in 50 States

What is Coporation

A Corporation is also referred to as a standard corporation. It is also called a C-Corporation or a Regular Corporation. A Corporation is a legal form of organization of persons and material resources, chartered by the state, for the purpose of conducting business and may have an unlimited number of shareholders, which may include shareholders who are foreign citizens. A Corporation may be public - one in which shares is offered for sale to the public or privately held - one in which shares is not sold to the public. Usually shares are held by the founders, by board members and by private investors, such as venture capitalists, who may or may not sit on the board of directors.
Shareholders are protected from the corporation's liabilities. "Double taxation" frequently occurs, because the corporation is taxed on its profits, and shareholders are also taxed on the distributions they receive, such as profit sharing payments or dividends
The most common type of incorporation is the C Corporation, which is a for-profit, state-incorporated business. A company registration is done with state authorities and must abide by corporate laws in the state where it is incorporated.
To incorporate or register company, you will need to register your business name, file a certificate of incorporation or articles of incorporation and pay a fee. You will also need to draft corporate bylaws and hold a board of director's meeting.