Business Entity Formation
Business means continuity and there is always a starting point of an incessant process. Thus, business is no exception and it also has a starting point. This point starts with INCORPORATION.
Sole Proprietorships – known as a sole trader, or simply proprietorship also. Owned and run by one individual. There is no legal difference between the owner and the business. They are low-priced to form, generally have no tax aspects and easy to dissolve. Here, profits and losses of the business are merely part of the owner's personal income; the company is omitted for tax purposes all profits and all losses accrue to the owner. All assets of the business are owned by the proprietor and all debts of the business are the proprietors.
Partnerships – are also relatively reasonable to form. It forms by two or more persons or any business entity who can create an agreement to divide profits and losses. Each partner has several combined liabilities to the partnership. As a result of that, any particular partner can be liable to pay entire debts of the partnership regardlessof participation in Profit and Losses or capital contribution into the partnership. Taxation is more complecated, but the partnership does not pay taxes by itself. It is only prerequisite to file an informational return to report the partnership’s profits and losses and how these were allocated among the partners. A partnership concludes in case of the death or bankruptcy of a partner or when they decide to terminate the partnership.
Limited Liability Companies or LLCs - can be used for a various types of nature of business and are highly flexible. LLC may have the same limited liability for members as corporation, or have some members with limited liability and some without or no limited liability for any members. It depends on state law. Unlike corporations, some States need that their LLC’s elect a date at which the LLC will automatically dissolve in the future. Some States also need that if a member dies, goes bankrupt or sees some other tragedy the residual members of the company must either dissolve or vote to continue.The members (e.g. shareholders or partners) can, but need not, have limited liability; can, but need not have, managers (e.g. directors and officers); can be elected and taxed either as partners (if they have more than one member) or as corporations or be disregarded for tax purposes like a sole proprietorship.
Corporations - are more complex than above two. Corporation is a NEW legal entity and is separate from its owners. Hence it is independent of shareholders. A corporation can be owned by one person and have one director and officer which depends on state law. The shareholders elect directors to fixpolicies of the corporation, who also represent their interests. The directors hire officers to manage day to day operations. Corporations are legally necessary to follow more formalities than any other entities, including annual meetings of the shareholders,directors, as well as board approval of most significant acts by the corporation. Taxation of corporations is much more complex.
Bjtaxportal is the accurate place to find the solutions for entity formation.
Corporations and LLCs are brilliant chances for entrepreneurs to minimize credibility and brand name, their personal liability and build greater reputation,. There are different types of entities. Each type of entity offers business advantages and distinct tax. BJtaxportal can help to form an entity (C Corporations, Non Profit Corporations, Subchapter S Corporations, LLP, LLCor LP,) in any of 50 US States.
What are the gains of incorporation to form an Limited Liability Company?
All businesses can benefit from incorporating irespective of their size. Benefits of forming a corporation or Limited Liability Company (LLC) involves:
- Name protection. In many states, other businesses may not file your exact LLC or corporate name in the same state. This will give you an exclusive name of doing business within your state.
- Tax flexibility. Though profit and loss typically pass through an LLC and reported on the owners’ personal income tax returns; an LLC can also elect to be taxed as a corporation. Likewise, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.
- Personal asset protection. Both LLCs and corporations allow owners to protect and separate their personal assets. In a properly managed company, owners and structured should have limited liability for business debts and obligations.
- Additional Reputation and Credibility. By adding“LLC” or “Inc.” after your business namecan improve instant authority. You may lose business from customers, partners or vendors if you are not incorporated.
- Perpetual existence. LLCs and Corporations continue to exist, even if ownership or management changes. Sole proprietorships and partnerships just end if an owner dies or leaves the business.
- Deductible expenses. Both LLCs and corporations may minimize normal business expenses, like salaries, before they allocate income to owners.
Would My Business form an LLC or Incorporation?
Identifying the entity type differs.Our associates at Bjtaxportalare well educated to help you to make the appropriate selection.
LLCs and Corporations are both distinct legal entities (business structures) which relish fewprotections under the law and important benefits. Most people form a legal business arrangement to safeguard their personal assets. Forming a Limited Liability Company (LLC) or Incorporating allow you to conduct your business without upsetting that you might lose your personal savings,home, or car because of a business liability.
We offer these services in addition to Entity formation –
- Application of EIN
- Registered Agent Service
- Certificates of Good standing
- Corporate & Compliance kits
- Filing of Annual/Franchise tax
- Business Licenses & permits
- Bylaws & Operating Agreements
- Registering a Business name
- Foreign Incorporations for operations in multiple states
- Maintenaining of minute books and drafting of resolutions