Incorporation Services

In order to create an LLC, articles of incorporation first need to be filed with the Secretary of State or similar government agency. Next, the LLC members need to enter into an operating agreement which sets forth the rights of the members and the rules for running the company. An LLC may also need to apply for a tax identification number with the IRS.

In all states, only one person is needed to form a LLC. Recent changes to the IRS code have promoted reforms in state laws permitting single-member LLC's. Single member LLC's file on IRS Schedule C.

Delaware is an easy state in which to incorporate and the annual cost is low. The Delaware law provides predictability and has been tested over years. Delaware has a separate Court of Chancery to handle corporation law cases quickly and competently. Delaware provides certain tax savings including favorable franchise tax rates. Non resident shareholders are not subject to Delaware taxation. Some say, Deleware courts liberally interpret corporation laws allowing favorable and more predictable decisions for corporations.

For tax purposes, all corporations are General C Corporations when they are formed. The ordinary income of a C Corporation is taxed at the corporartion rates The owner can elect to become a Subchapter ( S ) Corporation after being created as a C Corporation and have its ordinary income not taxed at the corporation rates but passed through to its shareholders and taxed at the individuals rates.

A limited liability corporation offers limited liability to its owners, but may elect to be taxed as a partnership which passes all the income and losses through to its owners. S Corporation can only have 100 stockholders and the stockholders cannot be corporations or non-U.S. citizens.

Shares of stock represent ownership of a corporation. When no shares are issued, no individual(s) owns the corporation. Therefore, shares must be issued to those individuals who will own the corporation. Most states have created many exceptions and exemptions from registering a stock issuance with the State or with the Securities and Exchange Commission for most small businesses, it is recommended to contact the appropriate entity to determine whether you must file a notice of stock issuance on a state or Federal Level.

A business corporation must sell shares of stock in order to capitalize the corporation. Capitalize provides the corporation with its own capital, separate from the money of its owners. This separation provides part of the support for shielding the shareholders from personal liability for the debts and obligations of the corporation. Shares of stock sold by the corporation represent proportionate ownership interests held by shareholders in the corporation. Par Value is a dollar value assigned to shares of stock which is the minimum amount for which each share may be sold. There is no minimum or maximum value that must be assigned. Shares may also have No Par Value, which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued. There is no minimum number of shares that must be authorized in the articles of incorporation. One or more shares may be authorized. The corporation may not sell more shares than it is authorized to issue and it must receive consideration in exchange for its shares.

Individuals and unincorporated entities (sole proprietorships)that regularly conduct business using an assumed name often referred to as a dba must file an assumed name certificate with the county clerk in each county in which business premises are maintained. If corporations, limited liability companies or limited partnerships, entities created by filing with the secretary of state, do business with a name that is different than the name set forth in the organizational documents, they must file assumed name certificates in the county or counties where the registered office and the principal office are located, and must also file with the secretary of state.

Incorporating will not keep another business from using your name. Filing articles of incorporation only prevents the secretary of state from filing a document to create another corporation, limited liability company or limited partnership that has the same, a deceptively similar, or similar name as the entity already in existence. Generally, every business must protect its own business name and the good will that it has acquired from the sale of its goods or services in a specific geographic area.