Why Incorporate?All legal and tax professionals agree, if your business is not incorporated you may be throwing away thousands of dollars in tax savings and deductions.
In addition, all of your personal assets such as your home, cars, boats, savings and investments are at risk and could be used to satisfy any law suits, debt or liability incurred by the business. Forming a Corporation can provide the protection and tax savings needed to give you peace of mind and make your business even more successful and profitable.
Some Benefits Include
Liability Protection: Properly forming and maintaining a corporation will provide personal liability protection to the owners or shareholders of the corporation for any debt or liability incurred by the business. Personal liability of the shareholders is normally limited to the amount of money invested in the corporation.
Tax Advantages: Another important benefit is that a corporation can be structured many ways to provide substantial tax savings. You can minimize self-employment taxes and increase the number of allowable deductions lowering the taxes you pay on the income of the business. Many corporations structure retirement and tax deferred savings plans for their owners and employees which can provide even greater tax savings.
Raising Capital: Sale of stock for the purposes of raising capital is often more attractive to investors than other forms of equity sales. A corporation can also issue Corporate Bonds to raise capital for expenditures without compromising the ownership of the business.
Incorporating Questions
What is a corporation?
A corporation is a legal entity that exists separately from its owners. Creation of a corporation occurs when properly completed articles of incorporation are filed with correct state authority, and all fees are paid.
What is the difference between an "S" corporation and a "C" corporation?
All corporations start as "C" corporations and are required to pay income tax on taxable income generated by the corporation. A C corporation becomes a S corporation by completing and filing federal form 2553 with the IRS. An S corporation's net income or loss is "passed-through" to the shareholders and are included to their personal return tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations. Subchapter S corporations, as they are also called, are restricted to having fewer than 75 shareholders, who must be individuals (S Corps cannot be owned by other corps) who are not nonresident aliens.
Do I need an attorney to incorporate?
No! Having an attorney is not a legal requirement to incorporate, except in South Carolina (a signature by a SC attorney is required on articles of incorporation). In all other states, you can prepare and file the articles of incorporation yourself; however, you should be thoroughly versed in the laws of your state.
In spite of their seemingly high hourly fees, a good corporate attorney can be a valuable resource to your small business. If you are unsure of what steps your business should take and you don't have the time to research the matter yourself, even the cost of one hour's consultation can pay off handsomely later. Just remember to bring lots of questions.
In spite of their seemingly high hourly fees, a good corporate attorney can be a valuable resource to your small business. If you are unsure of what steps your business should take and you don't have the time to research the matter yourself, even the cost of one hour's consultation can pay off handsomely later. Just remember to bring lots of questions.
Once you have decided, you can form your corporation and save you money.
How do I know if my name is available?
Visit Direct Incorporation.com for free corporate name search. We recommend you check your two top name choices. If neither of these is available, we recommend you make another name choice.
How do I name my corporation?
First and most important, we recommend that you spend some time coming up with a name for your corporation. Although each state has different rules concerning the naming of your corporation, the most common rule is that it must not be deceptively similar to another already formed company. The corporate name must include a suffix. Some examples are "Incorporated", "Inc.", "Company", "Corp." However, your state may have different suffix requirements.
What are the benefits of incorporating?
Visit Direct Incorporation.com for free corporate name search. We recommend you check your two top name choices. If neither of these is available, we recommend you make another name choice.
How do I name my corporation?
First and most important, we recommend that you spend some time coming up with a name for your corporation. Although each state has different rules concerning the naming of your corporation, the most common rule is that it must not be deceptively similar to another already formed company. The corporate name must include a suffix. Some examples are "Incorporated", "Inc.", "Company", "Corp." However, your state may have different suffix requirements.
What are the benefits of incorporating?
The primary advantage of incorporating is to limit your liability to the assets of the corporation only. Usually, shareholders are not liable for the debts or obligations of the corporation. So if your corporation defaults on a loan, unless you haven't personally signed for it, your personal assets won't be in jeopardy. This is not the case with a sole proprietorship or partnership. Corporations also offer many tax advantages that are not available to sole proprietors.
Some other advantages include:
A corporation's life unlimited and is not dependent upon its members. If an owner dies or wishes to sell their interest the corporation will continue to exist and do business.
Retirement funds, qualified retirement plans (like 401k) may be set up more easily with a corporation.
Most every state requires a corporation have registered agent and that agent must have a physical location in the formation state. The registered agent can typically be any person (usually a resident of the state) or any properly registered company who is available during normal business hours to receive official state documents or service of process (law suit).
How many Directors/Shareholders do I need?
Most states allow for one person to act as shareholder, director, and all officer roles.
How many shares of stock and what par value should I choose?
We provide a default of 1,000 shares, although you can choose any amount you want on all orders. Your par value is not requested on all orders, and is usually expressed as "No Par Value" or some dollar amount per share such as "$1.00" or "$0.10." Some states require that you do not issue your stock for less than the par value. Some states also base their fees on the number of shares authorized multiplied by the par value.
What is a Federal Tax Identification Number or EIN?
Your corporation is required to have an Employer Identification Number (EIN) also known as your Federal Tax Identification Number so that the IRS can track payroll and income taxes paid by the corporation. But, like a social security number, an EIN is used for most everything the business does. Your bank will require an EIN to open your corporate bank account.
We provide two EIN services:
Basic EIN Service - We prepare and email your SS4 (EIN application) & easy one-page instructions for obtaining your EIN. You need only review, sign and fax or call in the information to the IRS to get your own visit: EIN
Full EIN Service - We actually obtain your company's EIN for you.
What do I need to do AFTER I incorporate?
You must have your initial shareholder(s) meeting to elect your director(s), if your director(s) haven't been designated in the articles. Then, you must have your initial organizational meeting of your directors. At this meeting, you will need to elect your officers; adopt your company's bylaws; issue your stock (among other actions) and reaffirm banking relationships.
How do I get started?
Once you have decided on a name, order your corporation online or have an attorney do it for you. Once availability of your name choices are verified, draft your articles, file them with the state and wait for all appropriate documents to be recorded with the Secretary of State.
♦ you can COUNT on us for all of your book-keeping & tax services.
Some other advantages include:
A corporation's life unlimited and is not dependent upon its members. If an owner dies or wishes to sell their interest the corporation will continue to exist and do business.
Retirement funds, qualified retirement plans (like 401k) may be set up more easily with a corporation.
- Ownership of a corporation is easily transferable.
- Capital can be raised more easily through the sale of stock.
- A corporation possesses centralized management.
Most every state requires a corporation have registered agent and that agent must have a physical location in the formation state. The registered agent can typically be any person (usually a resident of the state) or any properly registered company who is available during normal business hours to receive official state documents or service of process (law suit).
How many Directors/Shareholders do I need?
Most states allow for one person to act as shareholder, director, and all officer roles.
How many shares of stock and what par value should I choose?
We provide a default of 1,000 shares, although you can choose any amount you want on all orders. Your par value is not requested on all orders, and is usually expressed as "No Par Value" or some dollar amount per share such as "$1.00" or "$0.10." Some states require that you do not issue your stock for less than the par value. Some states also base their fees on the number of shares authorized multiplied by the par value.
What is a Federal Tax Identification Number or EIN?
Your corporation is required to have an Employer Identification Number (EIN) also known as your Federal Tax Identification Number so that the IRS can track payroll and income taxes paid by the corporation. But, like a social security number, an EIN is used for most everything the business does. Your bank will require an EIN to open your corporate bank account.
We provide two EIN services:
Basic EIN Service - We prepare and email your SS4 (EIN application) & easy one-page instructions for obtaining your EIN. You need only review, sign and fax or call in the information to the IRS to get your own visit: EIN
Full EIN Service - We actually obtain your company's EIN for you.
What do I need to do AFTER I incorporate?
You must have your initial shareholder(s) meeting to elect your director(s), if your director(s) haven't been designated in the articles. Then, you must have your initial organizational meeting of your directors. At this meeting, you will need to elect your officers; adopt your company's bylaws; issue your stock (among other actions) and reaffirm banking relationships.
How do I get started?
Once you have decided on a name, order your corporation online or have an attorney do it for you. Once availability of your name choices are verified, draft your articles, file them with the state and wait for all appropriate documents to be recorded with the Secretary of State.
♦ you can COUNT on us for all of your book-keeping & tax services.
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