Form a Corporation

Our organization is here to help you form and maintain a corporation. Please read the information below to learn the basics about corporations. If you have any questions, do not hesitate to contact the team. You can reach us by phone, email, or a message here on our website. Read about Registered Agent – Legal Registration

What Are Corporations?

Every corporation functions as its own legal entity. All corporations remain distinct and separate from corporate owners. Through US law, corporations have many responsibilities and rights. In fact, many of those same responsibilities and rights apply to individuals. Here are some examples. A corporation can sue, get sued, enter into contracts, and own assets. Corporations can also borrow money, loan money, pay taxes, and hire employees. Check out Nonprofit Formation

The Basics of Forming a Corporation

Almost every large business in the US operates as a corporation. From Coca-Cola Co. to Microsoft Corp. to Toyota Motor Corp. Certain corporations conduct business using separate business names. For example, Google’s corporation name is Alphabet Inc. A specific legal definition of corporation will vary in every jurisdiction. The most crucial characteristic of any corporation comes down to limited liability. So, what’s limited liability? It positions shareholders to take part in profits. They do so through stock appreciation and dividends. But shareholders never have personal liability for debts of a company. What is Business Licensing

Form a Corporation

How does a company get incorporated? It happens when a group of shareholders decide to take action. The shareholders already share partial ownership of a corporation. Ownership takes place through the holding of stock shares. Almost all corporations have the same goal in mind. They desire to return a big-time profit to shareholders. Of course, not all corporations have this goal in mind. Some, like fraternal organizations or charities, operate with not-for-profit status. Or, the corporation holds legal standing as a nonprofit. Read about Sole Proprietor

No matter what, shareholders serve as owners of a corporation.

The shareholders never accept responsibility for many negative situations. (Beyond undertaking the potential loss that an investment has.) A “closed corporation” refers to a private corporation. This type of corporation features either one or several shareholders. Meanwhile, a publicly-traded corporation features thousands of shareholders. Each corporation forms within the US laws of individual states. Thus, state laws govern all corporations. Meanwhile, public corporations get regulated under federal law. This takes place through the Securities and Exchange Commission.  What is Non-Profit Organization 

How a Business Becomes a Corporation

Every state features unique laws about incorporation. The majority of states enforce owners to file articles of incorporation. They do so through the respective state. Then, stock gets issued to shareholders of the company. All shareholders have to elect a board of directors. This takes place through an annual meeting. Converting a private corporation into a public corporation is very complex. The act of doing so falls under US federal laws. The laws enforce public and complete disclosure of financial information. Both the government and potential shareholders can then access the information. Read about Dispute Resolution

Operating as a Corporation

Shareholders at a corporation often receive a vote for each share. Then, an annual meeting takes place. That is where the shareholders can elect the board of directors. A board will hire and oversee senior management. Meanwhile, senior management must take care of the corporation’s day-to-day activities. The business plan of the corporation gets executed by the board of directors. Members of the board do not have personal responsibility for corporation debts. But they do owe the duty of care to their corporation. A member can experience personal liabilities if he or she neglects this crucial duty. There are tax statutes that can protect the personal liability of each board member. Check out Article Hit & Run 

Liquidation of a Corporation

Read about Drug Crimes Here is how to end the legal existence of any corporation in the United States. All you have to do is the following key action. Put a corporation through the process of liquidation. Oftentimes, liquidation functions as a voluntary decision to stop operations. But sometimes liquidation becomes forced when a business has a financial collapse.

A business will appoint a liquidator.

He or she gets tasked with selling the assets of the corporation. Then, the company pays creditors. Next, the business can distribute all remaining money to the shareholders. Here is what “involuntary liquidation” means. It is liquidation that’s created by creditors of a corporation. It takes place when a corporation fails to pay its bills and expenses. Say that the situation cannot get resolved. That is when a corporation will file for bankruptcy.

Corporations vs. Businesses

Most businesses operate as corporations and vice versa. Any enterprise, including a business, can incorporate at any time. Operating as a corporation means that an enterprise is its own legal entity. The entity becomes separated from the owners. This means owners never get held responsible for corporation debts. Plus, corporations can borrow money, sue, get sued, and own assets.

How Do Corporations Form? | Form a Corporation 

Forming most corporations in the US is not complicated. First, a business owner has to file the articles of incorporation. This takes place through the state where the corporation will have registration. Details of incorporation vary from state to state. After incorporation, the issuance of stock to shareholders of the corporation happens. Next, the shareholders will hold an annual meeting. That is when the shareholders appoint a board of directors.

Corporations vs. Limited Liability Companies

Limited liability companies (LLCs) and corporations mature many of the same legal advantages. Plus, both entities also feature legal protections that benefit owners. For example, an owner cannot get held liable for debts from these two entities. Some LLC businesses experience a specific tax advantage. The taxes function in a “pass-through” manner. This means that both profits and paying taxes get passed over to the owners. The Best State for LLC.

Each LLC becomes governed through an operating agreement.

The agreement sets forth responsibilities and roles of all members. Every LLC can feature a partnership of doctors or lawyers that share a practice. Some big-time businesses, like Anheuser-Busch, operate as LLCs. The act of creating an LLC is very straightforward. First, the corporation will elect the board of directors. Then, the corporation adopts bylaws and holds annual meetings. Exact processes for incorporation vary from state to state. How Long Does It Take To Get an LLC?

Selecting the Right Business Structure | Form a Corporation 

The Best State for LLC  Choosing a business structure matters within every type of business. The structure will influence all sorts of day-to-day operations. Plus, your taxes and even personal assets could get affected. The key is to find a business structure that provides the right balance. That balance concerns benefits and legal protections.

Every business structure affects how much money a business owner pays in taxes.

Plus, paperwork needed to file and the ability to raise money also get affected. Not to mention, a business owner’s personal liability is also at stake. Make sure you select a business structure before registering a business with a state. Or, before registering a business with the IRS or SBA: Small Business Administration. Most businesses will have to secure a tax ID number. (Our organization can help you with this.) Then, a business will file for the right permits and licenses.

Again, put a lot of thought into which business structure you choose.

If you have questions, do not hesitate to contact our organization. We specialize in helping businesses convert their legal filings into new business structures. Restrictions always vary based on the exact location of a company. Exercise caution in this process. Business structure changes can result in unintended dissolution or tax consequences. That is why it is best to consult with an attorney, accountant, or business counselor. What is Plumbing Contractors License 

What Is a C Corp?

The word “corporation” can refer to any C corp. A C corp is a legal entity that stays separate from all owners. Each corporation can get taxed, make profits, and hold legal liability. When it comes to an owner’s personal liability, corporations hold strong protection. But keep in mind that the cost of forming a corporation is more than other structures. Corporations must conduct three major tasks. They are: reporting, operational processes, and extensive record-keeping.

A corporation always pays income tax on its profits.

That is not the case with an LLC, partnership, or sole proprietor. Sometimes corporate profits get taxed twice. The first tax takes place once a company makes a profit. A second tax is when dividends get paid to shareholders. This refers to personal tax returns. Read about What Is an EIN Code?

Corporations function with a separate and independent life from all shareholders.

Say that a shareholder leaves his or her company. Or, the shareholder sells every single share. The C corp can continue operations with ease. A corporation always holds an advantage when it comes to raising capital. Why? Because a corporation can raise funds by way of selling stock. This is a great benefit when attracting employees. Corporations are an excellent choice for medium- or high-risk companies. They also benefit businesses that must raise money or attempt to go public.

What Is an S Corp?

An S corporation functions as a special form of corporation. Its unique design allows it to avoid the double taxation policy that C corps endure. Through an S corp, the passage of profits and some losses can take place. This is where the profits go to an owner on a direct basis. Plus, the profits do not become subject to corporate tax rates.

Each state taxes an S corp in a unique manner.

But most states view S corps in the same way that the federal government does. Then, shareholders get taxed according to state and federal regulations. Certain states will tax an S corp based on profits above a specific limit. Yet some states do not recognize that an S corp election even takes place. Instead, those states will treat any S corp as a C corp. Check out Roofing Company Startup Cost 

All S corps have to file through the IRS to receive official S corp status.

But there are many special federal limits on S corp registration. That is why we encourage you to browse the IRS website. Or, you can contact our organization for more information. Keep in mind that both C corps and S corps have strict filing and operations processes. Say that an S corp shareholder leaves his or her company. Or, the shareholder sells his or her share. The S corp will continue to conduct business without any delays.

What Is a B Corp?

“B corp” refers to a benefit corporation. This type of legal entity functions as a for-profit corporation. B corp enemies have official recognition in most US states. A B corp is very much different from a C corp. The differences apply to transparency and accountability. But both B corps and C corps do get taxed in the same manner.

Shareholders at a B corp will hold the company accountable.

They demand the corporation to provide a public benefit. Plus, the company must also drive financial profit. In some states, business owners have to provide annual B corp benefit reports. The reports will showcase that the corporation contrives to the public good. What services do we provide?

What Is a Close Corporation?

A close corporation is much like a B corp. The difference is that close corporation corporate structures are not traditional. They do not take part in many formal processes that other corporate entities do. The state rules for close corporations will vary. In most cases, shares get barred from public trading. A small group of shareholders can run any close corporation. The shareholders can do so without a board of directors.

What Is a Nonprofit Corporation?

Nonprofit corporations focus on providing education, charity, or scientific work. They can also focus on literary or religious work. The common denominator is that the work of nonprofits benefits the public. In fact, that is why any nonprofit can receive tax-exempt status. This means that a nonprofit does not pay federal or state income taxes on all profits. Read about Form a Wyoming LLC

Each nonprofit has to file with the IRS to achieve tax exemption.

In some cases, state registration also must take place. Every nonprofit corporation follows rules that are much like those that a C corp follows. Plus, there are special rules for nonprofits about what to do with earned profits. Here is an example. There’s a rule that a nonprofit cannot distribute profits to political campaigns/members. “501(c)(3) corporation” is another term for a nonprofit. The term references the exact nonprofit section of the Internal Revenue Code. Following the code will allow a nonprofit to receive tax-exempt status.

Do You Need Help Forming a Corporation? Contact Us Now

Our organization is standing by to help you form or maintain your corporation. All you need to do is contact us to receive first-rate services, tools, and resources. We encourage you to pick up the phone and give us a call right now. Or, you can message us on our website or even send out an email. Our experts cannot wait to help you and your corporation succeed. Check about Form an LLC in Texas