"LLC" and "Corporation" have many of the same characteristics. The most important characteristic they share is that they both offer limited liability protection to their owners. Typically, shareholders are not liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder to pay the debts of the corporation. In a partnership or sole proprietorship, the owner's personal assets may be used to pay debts of the business. With an LLC, the members are not personally liable for the debts and obligations of the corporation. There are many important differences between the corporation and LLC. The entities are taxed differently. An LLC is a pass-through tax entity. This means that the income to the entity is not taxed at the entity level; however, the entity does complete a tax return. The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders, and is reported on their individual tax returns. With a standard corporation, the corporation is a separately taxable entity. Corporations are treated as separate legal taxable entities for income tax purposes. Therefore, corporations pay tax on their earnings. If corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders. Thus, to the extent that earnings are distributed to shareholders as dividends, there is a double tax on earnings at the corporate and shareholder level.
In terms of reporting income, they are quite similar. The LLC is somewhat less restrictive than the "S" corporation. There can be any number of members, and there are few restrictions on who those members may be. They are also a relatively new entity, so there is not as great a definitive body of tax rulings on them as there is with corporations.
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We can begin today and in some cases (like Nevada), have your corporation formed within 24-hours. All states differ in the turnaround time of their processing of your corporation. However, through relations with the various state offices, we strive to maintain the fastest turn-around times in the industry. Call and speak with one of our consultants to obtain the average turn-around time for any given state.
In most cases, the answer is no. In most states, InCorp assigns itself as the "incorporator" and is able to file all of the paperwork without an officer's signature. Some states require the officer's signatures on the Articles of Incorporation. In those cases, we will overnight the documents to you for your signature and have you return them to us, or use a facsimile signature to fulfill the requirement. In either case, you are not required to be present to form your corporation.
No. This is a common misconception among small-business owners, usually fostered by advice from an inexperienced accountant. Any seasoned advisor will tell you that incorporating is the first and foremost thing you should do when starting a business. Fforming an LLC will not only save you taxes but it will also limit your exposure to IRS audits by separating your personal and business expenses.
The title of the document filed in many states to register a limited liability company (LLC) with the state. Also known as articles of formation.
Managers are the individuals who are responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC). In most states, the managers serve a particular term and report to and serve at the discretion of the members. Specific duties of the managers may be detailed in the articles of organization or the operating agreement of the LLC. In some states, the members of an LLC may also serve as the managers.
The owner(s) of a limited liability company (LLC are the Members. Unless the articles of organization or operating agreement provide otherwise, management of an LLC is vested in the members in proportion to their ownership interest in the company.
