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Types of Entities
A Limited Liability Company, or an LLC, is a relatively new business structure, that first appeared in Wyoming in 1977, and is now recognized by every State’s statute and the IRS. An LLC is neither a partnership nor a corporation, but a distinct type of business structure that offers an alternative to those two traditional…
Corporation is a legal form of organization of persons and material resources, chartered by the state, for the purpose of conducting business. Corporation is owned by shareholders, the Board of Directors governs the business, and elected officers manage the day-to-day activities. Corporation must adhere to corporate tax laws and file corporate taxes regularly. A Corporation, also…
S-Corporation is a regular corporation that has 100 shareholders or less and that passes-through net income or losses to its shareholders for tax purposes (similar to sole proprietorship or partnership). Since all corporate income is “passed through” directly to the shareholders who include the income on their individual tax returns, S Corporation are not subject to…
A non-profit organization (abbreviated as NPO, also known as a not-for-profit organization) is an organization that does not distribute its excess profits to owners or shareholders, but instead uses them to help pursue its goals. Non-profit organizations are established for a variety of purposes, most commonly charitable, educational or religious. Some common examples are schools, hospitals, houses…
A Foreign Entity (also called “Out-of-State Entity”) is an entity formed in a state other than the state (or another jurisdiction, such as foreign country) in which your company was originally formed. As an example, if you have a Nevada registered corporation, and you want to expand your business into New York State (e.g. buy real…
Managing your Business
An Annual Report is a mandatory yearly filing with the state in which your business was formed regarding your business. Not all states have annual reports, and not all types of entities are required to file one. For example, New Mexico has no annual report for LLCs, but has a biennial report for corporations. Other…
Amendment of company information is needed when certain facts regarding the company change. If you decide to officially change the name of your business entity, add or remove members, officers, managers (or other persons related to the company), business or mailing address, registered agent, or other company details specified in the company Articles, you need…
Various reasons could lead to the dissolution of the business, such as bankruptcy, retirement, or change in career direction. When a business entity is no longer doing business, it is very important to follow the legal steps in “winding itself up” as a legal entity. A Corporation or an LLC is an entity created under authority granted by the…
Most states require entities to pay annual fees and/or taxes, and maintain valid Registered Agent with physical address in the state. Failure to make the necessary payments or maintain a registered agent often leads to the company being suspended, forfeited, or administratively dissolved. When that happens most of the time it’s possible to bring the…
In some cases a company that was formed as one entity type (LLC, Corporation, etc.) reaches a point where it becomes necessary or preferable to change its type to a different entity type. Examples of such cases vary from LLCs looking to raise money from investors, who require shares of stock and more formal management…
If you want to move your company from the state of formation to a different state it would need to go through the process of changing company domicile (also called “domestication”). You can change the domicile from any state, but only into a state that support domestication. The benefits of domestication include keeping the same tax…
The election of S corporation status is made by filing a form called “Election by a Small Business Corporation” with the IRS Service Center, where the corporation files its corporate federal income tax return. The election of the S corporation status must be unanimously approved by all of the shareholders by having all of them…
Starting your Corporation
Trade name (also called “fictitious business name”, “assumed name”, or DBA for “doing business as”) is a legal way to do business under a particular name that you file with the state, county, or in some cases local municipality. Its the easiest and most cost effective way to do business under a new business name…
An Employer Identification Number (EIN) is used to identify a business for tax purposes with the Internal Revenue Service (IRS). An EIN is similar to a social security number for your business. Every business, except for certain sole proprietorships that do not have any employees, should have such EIN. Certain nonprofit organizations such as churches, clubs, trusts, and estates,…
Sales tax is a tax on the end-purchase of a product or a service, and is imposed on all retail sales, leases and rentals of most goods, and on some services that are considered taxable. Sales tax normally does not apply on the purchase of a product intended for re-sale or for subsequent processing. Sales…
Every business must ensure that it maintains the appropriate licenses, permits and tax registrations before doing business. Licensing requirements can be mandated from the local, state and federal levels. These requirements would apply to entities, and in some cases to individuals associated with entities. Some companies may need to obtain multiple licenses and some regulated…
You might not be ready to incorporate yet, but it could be a good idea to reserve your business name before somebody else grabs it. Once a name you selected for your company is available, it can be reserved for a certain period of time, with allowed reservation time frames differing from state to state.…
Miscellaneous
Publication of a legal announcement (or legal advertising) is a form of classified advertising usually mandated by a state or local law. Legal announcements are published in approved newspapers or journals that serve to inform the public in a specified area. The approved newspapers or journals are selected based on the location of the business that is…
A registered agent (sometimes also referred to as “resident agent”) is the person or an entity appointed to accept legal documents on behalf of the corporation. Legal entities, such as corporations and LLCs, must appoint a person or an entity to act as their registered agent, so in case someone sues them the papers will be served on the registered…
A Company Kit (Corporate Kit for corporations / LLC Kit for LLCs) is a binder containing essential items for the maintenance and administration of a corporation/LLC. Once your corporation/LLC has been formed, you must comply with corporate/LLC formalities. These formalities include holding initial and annual meetings of directors and shareholders, adapting bylaws, and issuing shares…
Certificate of Good Standing is a certificate issued by the Secretary of State’s (or equivalent agency) evidencing that a business (corporation, LLC, partnership, etc.) has complied with the applicable provisions of the laws of the state, is in good standing, and authorized to transact business or to conduct affairs within the state. To obtain Good Standing Certificate…
A certified copy is a duplicate of an original document that is certified as a true copy by the officer having custody of the original. There are several reasons why you might need certified copies of some documents: Keeping the original of your formation documents or any other state-filed document with your company records records is important.…
If you need to use a document issued in the U.S. (such as Articles of Incorporation) abroad, that document needs to be certified for foreign use, either by having an apostille affixed to it, or by certifying it at the embassy of the country where it will be used. Examples of such use are opening…
Tobacco industry is heavily regulated, and one is required to obtain a license when selling, importing or manufacturing cigarettes and other tobacco products. Typically, other tobacco products (OTP) have somewhat less strict licensing requirements than cigarettes. Tobacco licenses are granted by local, state or federal authorities, depending on the location of the business and nature…
