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Plenty of businesses that begin as partnerships and LLCs eventually transition to C-corp status. Regardless of what you plan for your business, it’s important to have a clear understanding of each option so you can weigh pros and cons carefully. Partnerships are similar to sole proprietorships when it comes to liability and taxes. A limited partnership (LP) or limited liability partnership (LLP) may also be considered depending on the industry and other specifics. While not a corporation in the traditional sense, this is a popular business structure that combines elements of a corporation.
- Incorporating a business offers several benefits that can positively impact the company and its shareholders.
- But the steps will look fairly similar no matter which online incorporation service you use.
- The filing receipt reflects the date of filing, the name of the corporation, an extract of information provided in the Certificate of Incorporation and an accounting of fees paid.
- You can find more details about the publication requirement under the Filing Procedure document provided by the state.
- Most online incorporation services also offer registered agent services.
- Some tax statutes also provide for the personal liabilities of the board of directors.
- This statement must be filed with the Secretary of State during the same month that the certificate of incorporation was filed.
Minutes of all board meetings should be recorded and kept with the corporation’s records. The costs to file the articles of incorporation paperwork with the state where you form your C-corp vary by state as do the fees charged by attorneys―if you use them―to handle the process for you. In general, state filing fees for articles of incorporation range from $50 to $500. You will want to check with your particular secretary of state to find out the actual fee. Attorney fees can range between $500 and $5,000 for the entire process. Like a C-corp, an S-corp is composed of shareholders, directors and officers and follows the corporate regulations in order to enjoy the same protections from personal liability.
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While the process for incorporation may be complicated, there are many benefits to doing so. If you elect this business structure, it’s vital to fulfill corporate requirements in order to maintain corporate personhood and liability protection. The fees to register a corporation vary from state to state, but they often cost a couple hundred dollars. This is different than, say, a sole proprietorship, which exists automatically without owners having to pay any filing fees. In addition to filing fees, you’ll have to pay for things like business license fees. And you’ll have to do this in every state, and potentially every county, in which you operate.
Nonprofits are often called 501(c)(3) corporations — a reference to the section of the Internal Revenue Code that is most commonly used to grant tax-exempt status. You’ll still have to follow the strict filing and operational forming a corporation processes of a C corp. LLCs protect you from personal liability in most instances, your personal assets — like your vehicle, house, and savings accounts — won’t be at risk in case your LLC faces bankruptcy or lawsuits.
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However, there is no requirement that a lawyer prepare the documents when forming a corporation. In essence, an S-corp combines the tax privileges of a partnership with the corporate protections of a C-corp. Private corporations, in contrast, are not listed on stock exchanges and sell their shares privately. Private corporations face less stringent regulations, allowing more flexibility for them to run and expand their businesses. Public and private corporations differ significantly regarding how they raise capital. A public corporation utilizes initial public offerings to sell shares directly to the public.
Whether it’s to save money on taxes, attract investors, protect yourself, or boost reputability, starting a corporation might be the best next step for you and the business. A corporation is a legal entity that is separate from its owners, which can protect you from any business liabilities and help get your business off the ground. Choose carefully when deciding which business structure is right for you. It’s important to find the right balance of legal protection and corporation benefits that meet your specific needs. Most businesses need some type of business license or permit, but the requirements for your business will depend on where you’re located and what industry you’re in. Some states and many localities require all businesses to have a general business license.
