Incorporation Services
How to start a corporation?
- Tell us your business name
- Answer a few questions
- We'll complete and file your paperwork
Why start a corporation
Legal Protection
Shield your personal assets from business liabilities. A corporation provides a legal barrier, ensuring that your personal finances remain separate from your business obligations.
Attracting Investment
Corporations can issue shares, making it easier to attract investors. This allows your business to raise capital for expansion and development.
Perpetual Existence
Unlike sole proprietorships or partnerships, a corporation has perpetual existence. It continues to exist regardless of changes in ownership or the death of shareholders, providing stability and longevity.
Frequently asked questions
Both entities provide liability protection, ensuring owners are not personally responsible for business debts or liabilities. However, the distinction lies in ownership structure. LLCs have members with ownership divided into membership interests, while corporations have shareholders with ownership divided into shares or units of stock.
Maintenance processes also differ. Corporations usually entail more formal record-keeping, reporting obligations, less management flexibility, and a mandatory board of directors. Although LLCs are perceived as simpler to initiate and maintain, investors often favor corporations.
Forming a corporation safeguards your assets by establishing a legal separation between personal and business liabilities. In the event of business debts or legal actions, your personal assets are shielded, limiting financial responsibility to the assets of the corporation. This protective measure ensures that your personal wealth, such as home or savings, remains secure and is not directly at risk due to the business’s financial obligations.
Shares represent ownership in a corporation, providing individuals with a stake in the company. There are two primary types of shares: common shares and preferred shares.
Common Shares:
- Common shares grant shareholders voting rights at company meetings and a share in the company’s profits. However, they are last in line for distribution if the company faces liquidation.
Preferred Shares: - Preferred shares do not usually come with voting rights but offer priority when it comes to profit distribution and claim on company assets during liquidation. They are considered a safer investment.
If you’re considering the shift from an S corporation to a C corporation, it’s essential to navigate the process carefully. Ensure shareholder approval for the conversion, typically requiring a majority vote.
File IRS Form 8832, known as the Entity Classification Election. This form signals the change in tax classification, indicating the desire to be taxed as a C corporation.
Verify that your corporation meets the necessary requirements for C corporation status. Be mindful of potential double taxation and comply with the specific regulations governing C corporations.
Gain a comprehensive understanding of the tax implications associated with the conversion. Unlike S corporations, C corporations face taxation at both the corporate and individual levels.
Inform state authorities about the change in your corporation’s status, adhering to any state-specific regulations.
Revise corporate documents, including articles of incorporation and bylaws, to accurately reflect the updated status.
Consult with tax professionals or legal advisors who specialize in corporate transitions. Their guidance can be invaluable in navigating the complexities of the process.
File any additional paperwork mandated by state and federal authorities to finalize the conversion.