Questions & Answers

What is a corporation ?
A corporation is a legal entity that exists separately from its owners. Creation of a corporation occurs when properly completed articles of incorporation (called a charter or certificate of incorporation in some states) are filed with the proper state authority and all fees are paid.

Do I need an attorney to incorporate?
An attorney is not essential to incorporate. However, you do need someone to assist you who knows the requirements of your state law. And you need to make certain you complete the whole process.  Otherwise, you could lose the benefits of incorporation.

What paper work is required to incorporate?
Articles of incorporation conforming to state law must be prepared and filed with the proper state authorities and filing fees, initial franchise taxes, and other initial fees must be paid. If you incorporate through us, all you need to do is complete our order form. We will prepare and file your articles of incorporation. Just fill out the order form and we do the rest.

Where should I incorporate my business?
One of the first decisions a business must make after deciding to incorporate involves selecting the proper state of incorporation. A corporation is not required to incorporate in the state of its operations; however, often the best decision is to incorporate in your home state. Two issues must be weighed to determine the proper state. (1) a dollars and cents analysis comparing the costs of incorporating in the state of operation versus qualifying to do business as a foreign corporation in the state under consideration and (2) determining the advantages and disadvantages of each state’s corporate laws and tax structure.

How many people are needed to form a corporation?
In most states it takes just one person to incorporate.

What should I name my corporation?
Choose the name of your corporation carefully. It is very important that you portray the image you want for your new corporation. Legally, the name you select must not be deceptively similar to any existing corporation in your state Additionally, the name you choose must show your business is incorporated. Most states require that the corporate name be followed by Corporation, Incorporation, Company, Limited or an abbreviation of these words.

What is an S Corporation?
Standard business corporations or C corporations are required to pay income tax on income generated by the corporation. Making the S corporation election by completing and filing form 2553 with the IRS is a way to avoid having your corporation treated as a separately taxable entity. An S corporation is simply a standard business corporation that has elected a special tax status with the IRS. This tax treatment allows the corporation not to be a separately taxable entity. Instead, the income of the corporation is treated like the income of a partnership or sole proprietorship; the income is “passed-through” to the shareholders. Thus, shareholder’s individual tax returns report the income or loss generated by an S corporation. To be classified as an S corporation, a corporation must make a timely filing of Form 2553 to the IRS. In order to qualify for S corporation status, the corporation must be a U.S. corporation with only one class of stock and the shareholders must number fewer than 75. These shareholders must be individuals, estates or certain qualified trusts, who consent in writing to the S corporation election. The shareholders can not be non-residential aliens.

Should I choose an S corporation or an LLC?
S corporations and LLC’s are suppose to provide the same or similar liability protection. The difference is that S corporations have been used for many more years than LLC’s so there are more court decisions to rely on to help determine how a court will decide various issues concerning liability. S corporations and LLC’s receive similar tax treatment, i.e. the participants are taxed similar to a partnership where the income and/or losses are reported by the individuals on their own tax returns. S corporations may help to reduce FICA taxes while this benefit is still uncertain with LLC’s. Because LLC’s are relatively new, some accountants are concerned that certain tax issues are still not decided by the IRS. It is usually advisable to speak to an accountant or tax attorney to review your particular circumstances.

How do I get started?
After making the decision concerning what business entity is best for your business, Articles of Incorporation must be filed with the state government and initial fees must be paid. IncSource will complete these administrative tasks quickly and effectively. All you have to do is fill out the simple order form. After your Articles are filed, your corporation must hold an organizational meeting where bylaws are adopted and the incorporation process is completed. We can do this for you.

For questions call toll free 1-888-527-6207.

What is a Limited Liability Company?
The LLC is not a partnership or a corporation. It is a distinct business entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.

What paper work is required to form an LLC?
Articles of organizations must be prepared and filed with the state and filing fees, initial franchise taxes, and other initial fees must be paid. If your LLC is formed through IncSource, all you need to do is complete our simple order form. We will prepare and file your articles of organization, pay the minimum filing fees, and prepare the other necessary documents.

What should I name my LLC?
Choose the name of your LLC carefully. It is very important that your name portray the image you want for your new company. Legally, the name you select must not be deceptively similar to any existing LLC in your state. For example, if an LLC named West LLC exists in your state, you probably would not be allowed to name your business West Limited Liability Company. It is possible that the name you select will not be distinguishable; therefore, we ask for a second choice on the LLC order form. The name you select must show your business is a Limited Liability Company, so it must include the words “Limited Liability Company” or the abbreviation LLC.

How many people are needed to form an LLC?
As of January 1st, 1999 a few states require two members. These states are: California, the District of Columbia, Massachusetts, and Tennessee. The IRS does allow one member LLCs to qualify for pass-through tax treatment; however, taxation of one person LLCs at the state level may be different.

How is an LLC managed?
An LLC may be managed by its members (owners) or by selected managers. If the LLC is to be managed by its members, it operates much like a partnership. Each member has an equal say in the decision making process of the company. If the members choose, they may elect a manager or managers to act in a capacity similar to a corporations’ board of directors. These managers are in charge of the affairs of the corporation. Member management is the normal default rule of state law. This means that if managers are not selected in the articles of organization the members will direct the affairs of the LLC.

How is an LLC taxed?
An advantage of the LLC is its tax flexibility-the members of the LLC are allowed to select how the entity will be taxed. Most LLCs select to be taxed as a partnership. This means that the LLC is treated as a pass-through entity, paying no separate entity level tax. On the other hand, the LLC could elect to be taxed as a corporation by completing IRS Form 8832. IF this election is made, the LLC would pay a separate entity level tax. This choice may be advantageous if the LLC owners want to retain profits in the business and would prefer to have these retained earnings taxed at the corporate income tax rate as opposed to the personal rate.

How do I get started?
After you decide to form an LLC, articles of organization must be filed with the state government and initial fees must be paid. If you choose IncSource to form your LLC, we will complete these administrative tasks legally and affordably. After your Articles are filed, your LLC should have an organizational meeting where an operation agreement is adopted and other preliminary matters are completed. We can do all of this for you.

For questions call toll free 1-888-527-6207.