Incorporating 101 - Corporation or LLC
David on Jan 01, 2010
NY INCORPORATION SERVICES
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incorporate, tax id/ein or certificate of authority
When you're starting a business, you need to focus on making it work, not running around dealing with complicated procedures. Don't be fooled by others advertising lower prices. Check out their offer and see the fees pile up. Some just send you forms you have to fill out and then leave you stranded. We offer the best value around. Fact is that you need your corporation set up right, or else you'll spend time, money and frustration correcting it.
We can come in, pick up your paperwork or do it over the phone. You need a LIVE human being to make sure that everything is done right.This means that the price you see, is the price you pay.
Business Corp. (aka C Corporation)
LLC - Limited Liability Company
LLP - Limited Liability Parnership
Not For Profit Corporation
>>> NEED IT FAST? We can do it in 2 business days.
All of our incorporating services include official corporation kits. Each kit includes:
- 3 Ring Padded Binder with corporate name on spine.
- Alligator look alike slip case.
- Corporate Seal with pouch.
- 21 Customized Stock Certificates with corporate name.
- Stock Transfer Ledger.
- Checklist, Instructions and worksheets.
- 8 Tab Dividers.
- Customized Minutes with corporate name.
- Customized Bylaws with corporate name.
- Customized Agreements and Plans with corporate name.
Each kit also includes the following depending on the type of corporation you file for:
(Waiver of Notice and Minutes of Annual Meeting of Shareholders, Waiver of Notice and Minutes of Annual Meeting of Directors, Minutes of Special Shareholders Meeting, Notice of Annual Meeting of Shareholders, Notice of Organizational Meeting of Incorporators and Directors, Waiver of Notice of Organizational Meeting of Directors, Waiver of Notice of Organizational Meeting of Incorporators, Notice of Special Meeting of Shareholders, Notice of Special Meeting of Directors, Resolution granting Power of Attorney, Special Power of Attorney, Proxy, Independent Contractor Agreement, Buy-Sell Agreement, Employment Agreement, Banking Resolution, Section 248 Election and more...)
Creating a new company is easy with us. We take care of the paperwork, legwork and make sure you get your company set up properly. Just call us, let us know what you need and we can start working on it right away.
If it is a business need, we are here to help. Below you will find a list of other services that we provide:
- Obtain Tax ID's, EIN's
- Obtain a Certificate of Authority
- Open a Corporation
- Get Your DBA (Doing Business As) Certificate
Contact us and get the process started now.
In order to properly create your business you need to be aware of the options that New York State offers and how they affect you. Therefore, let's take look at the most popular forms to arrange your business:
- Corporation (aka C or S Corporation – for profit)
- LLC – Limited Liability Company
- Not-For-Profit Corporation
- Sole Proprietorship
- Limited Partnership
Corporations And Limited Liability Companies (LLC)
While forming a corporation or LLC can be a bit more complex and cost more, it may well be worth it in the case of some small businesses. The main benefit behind the corporations and Limited Liability Companies is that it protects you from the personal liability of the owner as far as court judgments and business debts against the business are concerned.
Corporations are independent tax and legal entities that have a separate status from the owners (shareholders) of the corporation. Owners of the corporations don't use their personal tax returns to pay taxes on corporation profits. However, they do declare and pay personal income tax on money they get from the corporation in the form of salaries, bonuses etc…
Limited Liability Companies (LLC's) also provide protection for the business owners by limiting their liability for claims and debts. When it comes to taxes however, the LLC owners pay taxes on their share of business income on their personal business taxes.
It should be noted here that Sub-Chapter S corporations are not subject to this double taxation, all the tax passing straight to the owner of the corporation. To learn more about the differences between the Limited Liability Company and corporations you can go to our New York Corporation Or LLC article and see what's right for you.
An LLC or Corporation would make sense for you if you either face a risk of being sued by clients or piling up a lot of business debt, or you have many personal assets that you'd like to protect from business creditors.
This is a corporation that is created especially for purpose of carrying out an educational, religious, literary, scientific or charitable purpose. A non-profit can raise capital by soliciting public or private grants and donations from either companies or individuals. In general, the federal and New York state governments does not tax these types of corporations.
You can think of a sole proprietorship as a one person business. Unlike the Limited Liability companies or the corporations, you don't need to register your sole proprietorship with New York state. You can create it just by going into business for yourself.
The problem with sole proprietorships is that it is not separate from the owner. Therefore any debt, income loss or profit will be filed on your personal tax return. You are also responsible for any obligations related to your business – things such as court judgments or debts.
Sole proprietorships can seem like a quick fix solution, but remember that you are personally responsible for everything your business does. As such, you should think long and hard about going down this road.
A partnership is similar to a sole proprietorship, with the exception that it is owned by 2 or more people. As with the sole proprietorship, there are no papers to file with New York State. The partnership starts when you begin a business with your partner.
Of course, the other rules of sole proprietorship also apply here. The owners are responsible for any business obligations such a accumulated debt, and they declare and pay taxes for their income on their personal tax forms.
A partnership might make sense in a situation where you don't have to worry about being liable for your business. In today's world however this is not recommended.
These are usually created by a company or person that solicits investments from others ("others" being the limited partners).
The general partner controls the usual business of the Limited Partnership and is personally responsible (liable) for debts the business incurs (unless the general partner is a corporation or LLC). The limited partners have a little control over everyday business decisions. They are not liable for the business, the way the general partner is.
These kinds of partnerships are rather complicated and expensive to setup and run. Unless your situation is such that it demands the advantages described above (mainly soliciting investments from others), this is an option that you should not enter into lightly.
What's Right For You?
Once you have made up your mind to create that new business, it's time to think about which option is right for you. In most cases you want to limit the personal liability of the owner or owners. Generally cases you have two choices: A corporation or a Limited Liability Company (LLC). Each situation is different, but there are certain things that you should keep in mind when choosing between the two options.
The LLC (Limited Liability Company)
The truth is that for most small business situations the simplicity and flexibility of the LLC makes much better sense. This is because a regular corporation (called a C corporation) and its shareholder are subject to double taxation, whereas the LLC's owners (members) are taxed only once because the tax liabilities are passed through to them. The actual LLC does not pay tax on its income, unlike the corporation. We should note here the Subchapter S corporations which are similar to the LLC from this point of view.
The Corporation Advantage
Of course, corporations have their own advantages; these include but are not limited to:
A structure that is more appealing to potential investors.
If you have just a few investors that are also involved in the day to day operations of your business, you pretty much cancel out those awkward moments of trying to prove yourself because you are dealing with someone who knows what kind of business you run, and ultimately where their money is going. Now think of it from the other perspective: What if your investor did not work with you directly? What could you (the business owner) offer in order to make things run more smoothly? In these situations, a corporation enables you to issue corporate stock certificates that investors would consider tangible evidence for their partial ownership of the business.
Outside of being the owner (shareholder) and employee, the corporation can hire you as its CEO (Chief Executive Officer), pay you a salary that's tax deductible. You also get fringe benefits such as covering your health insurance premium.
A Limited Liability Company would allow you to deduct only a portion of those fringe benefits. From a taxation point of view, any benefits provided to the members of an LLC don't get the same favorable treatment as in a Corporation.
The S Corporation
If you're worried about your self-employed taxes, an S Corporation might make a great choice since the LLC owners get taxed more.
These are the taxes that are withheld from employees' paychecks. The IRS collects this tax from self employed people also. We're talking here about the 15.3% that gets collected on incomes up to $94,200 and 2.9% on earnings that go above this plateau.
For S Corporations you pay the self-employment tax on income you get as compensation for the services. However, you don't pay it on profits that come to you as a shareholder (remember that you're a shareholder even if you're the sole owner – in such a case you would have 100% of the shares of the company).
Call or contact us to discuss what would best work for your particular situation.