A corporation is an artificial person created by law. It has many of the rights of a tax paying individual. Corporations are frequently used in the United States. Virtually, every large enterprise with stock traded on any stock exchange is a corporation. Corporations may have multiple classes of stock representing ownership. The two classes of stock are common and preferred shares. Corporations must file articles of incorporation in their home state. Some states also require that bylaws be filed as well.
S corporations’ enjoy many of the benefits enjoyed by “C” corporations. An “S” corporation, however, is taxed like a partnership. The “S” corporation has no tax liability on its net income. And the owner’s (shareholders) income tax is based on their share of the firm’s net income. Whether or not it is distributed to them. Another huge benefit is limited liability.
“S” corporations are limited to how many shareholders they may have, and none of them can be nonresident aliens. Only one class of stock may be issued or outstanding, which is common stock. Additionally, an “S” corporation may own only 80 percent of a subsidiary business firm. Typically “S” corporations must file articles of incorporation with their home states. Some states also require bylaws.
Until you file articles of Incorporation with your state for your “C” or “S” corporation, it may not be recognized as a corporation. Some states also require the filing of Corporate bylaws as well.
Limited liability companies (LLCs and LLPs) enjoy the benefits of limited liability like corporations while being taxed like a general partnership. LLCs may be either unincorporated or incorporated. Typically, the owners’ net income is taxed at an individual personal rate rather than at the rate of a corporation. Those taxation rates apply to both net income and dividends.
Limited-Liability Companies are recognized by state taxing authorities and have not yet been recognized by the IRS as a legal form of business. When applying to the Federal government, an applicant would have to apply as a proprietorship, or partnership for a single or multiple member LLC. They would also have the option of applying for incorporation if the LLC had plans to be recognized as an incorporated LLC.
Not all states permit formation of limited-liability companies. They generally have a limited lifespan. Members as the owners are called in limited liability companies, are usually a small group. States do not restrict the number or the type of members. Unlimited transferability of ownership is generally not permitted.
In general, LLCs can be formed by any business or persons, while LLPs are generally restricted to professionally licensed individuals. The LLP designation stands for a Limited Liability Partnership. Either of these limited liability entities must be formed through articles of organization and or an operating agreement which must also be filed with the state for recognition of that organization as a legal entity.
Why Use Bizdoks a division of the Saafenet Corporation
Why you may ask, should you use Bizdoks, for your document preparation needs:
- First and foremost, Bizdoks is the number one document preparation website online. We maintain files of all your critical registration and licensing documents for you. Should you ever loose a document you need, you can get a copy from us. You always have access to critical documents.
- We allow you to complete a one-page application that we use to prepare custom articles of incorporation or operating agreements for you, thereby helping you to avoid the most common mistakes and the frustration that goes with them.
- Bizdoks does not use fill in PDF forms which might be confusing and therefore, difficult to complete. Rather we prepare all forms or applications the state in which your business is registered, requires, and provide you with a file copy for your records.
- Bizdoks does not require you to send us state fees for incorporating or establishing a limited liability entity. Many documents require original signatures and a document preparation company could tie up your documents for months mailing the forms to you for signatures, and be awaiting the return mail prior to mailing them to your state along with your fees. Our service is complete. When you get your articles or your operating agreement it comes with a stamped enveloped addressed to your state. All you have to do is keep a copy for yourself, and, mail the completed and originally signed forms to your state with your payment for fees.
If you’re ready for incorporation or setting your company up as an LLC, click here.