Business Incorporations (United States)

Incorporation is the legal process used to form a corporate entity or company. A corporation is the resulting legal entity that separates the firm’s assets and income from its owners and investors.

  • Incorporation is the way that a business entity known as a corporation is formally organized and officially brought into existence.
  • The process of incorporation involves writing up a document known as the articles of incorporation and enumerating the firm’s shareholders.
  • In a corporation, the assets and cash flows of the business entity are kept separate from those of the owners and investors, which is called limited liability. Client responsibility, we offer financial services for support at an additional cost.
  • Though incorporation, a company’s tax liability is also treated differently than that of a sole proprietorship or partnership. Dependent on the company status.
  • Incorporating makes it easier for a business to sell shares, raise capital, and divest ownership from a portion of the business.

Offering:

  • LLC
  • Series LLC
  • Not For profit
  • S corporation tax status designation
  • C Corporation
  • Joint Ventures
  • Partnerships

LLC

A Limited liability company (LLC) is a business structure that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.

Series LLC

A series LLC consists of a “parent” or “umbrella” LLC with one or more sub-LLCs or “series” that branch off from it. All the child series are isolated from each other.

Under the series LLC, owners can create an unlimited number of child series with separate assets, members and operations (In the state of IL 5 Companies per series). Each child series or sub-LLCs should have its own bank account, name and records. If there is a lawsuit incurred by one series, the other series are protected from liability.

Series LLCs can be useful for LLCs that operate multiple lines of business or investments and want to insulate each line from risks incurred by the others. Common examples include real estate investors with several rental properties and investment firms with multiple investment strategies. Without a series LLC, these businesses would have to form separate LLCs for each facet of their business to gain the same type of liability protection.

Not For profit

Not-for-profit organizations do not earn profits for their owners. All of the money earned by or donated to a not-for-profit organization is used in pursuing the organization’s objectives and keeping it running; income is not distributed to the group’s members, directors, or officers.

Typically, organizations in the nonprofit sector are tax-exempt charities or other types of public service organizations; as such, they are not required to pay most taxes. Some well-known nonprofit organizations include the American Red Cross, the United Way, and The Salvation Army. There are also nonprofit corporations known as nonstock corporations, which are usually formed for such purposes as clubs, rescue squads, and religious and charitable organizations.

S corporation tax status designation

S Corporation is a variation of a corporation within Subchapter S of Chapter 1 of the Internal Revenue Code. Essentially, an S Corp is any business that chooses to pass corporate income, losses, deductions, and credit through shareholders for federal tax purposes, with the benefit of limited liability and relief from “double taxation.”

To be an S Corporation, your business first needs to be set up as a corporation by filling and submitting documents like the Articles of Incorporation or Certificate of incorporation to the appropriate government authority, along with the applicable fee. Using form 2553, this is not a company type it is a tax status selection. Which can be very sensitive if procedures are not followed. The 15% savings are the FICA Taxes, be sure to understand how this affects your retirement.

C Corporation

A corporation is a legal entity that is separate and distinct from its owners. Under the law, corporations possess many of the same rights and responsibilities as individuals. They can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

A distinguishing characteristic of a corporation is limited liability. Its shareholders profit through dividends and stock appreciation but they are not personally liable for the company’s debts.

Almost all large businesses are corporations, including Microsoft Corporation and the Coca-Cola Company

Joint Ventures

A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.

Each of the participants in a JV is responsible for profits, losses, and costs associated with it. However, the venture is its own entity, separate from the participants’ other business interests.

Partnerships

A general partnership is a business arrangement by which two or more individuals agree to share responsibilities, assets, profits, and financial and legal liabilities of a jointly-owned business.

In a general partnership, partners agree to be personally responsible for potentially unlimited liability. Liabilities are not capped as they would be in, say, a partnership formed as a limited liability partnership or a limited liability company (LLC). Partners are responsible for the debts, and the seizure of an owner’s assets is a possibility. Furthermore, any partner may be sued for the business’s debts.

Since a general partnership is a pass-through entity where income flows straight to the owners, each partner reports their share of partnership profits or losses on their personal tax returns. The partnership itself is not taxed.