Read Frequently Asked Questions for a Better Understanding of Business Entities and Registered Agent Services
Yes, you do not have to live in a particular State in order to incorporate in that State.
One of the benefits of incorporating a business is to protect your personal assets from creditors of the business. It is not sufficient, however, just to incorporate. You must also ensure that corporate formalities are followed, such as the preparation of bylaws, organizational minutes, and the issuance of stock certificates to the shareholders.
All companies actively engaged in business require an EIN from the Internal Revenue Service, except for sole proprietors who do not file any excise or pension plan tax returns. In addition, most banks, creditors, and others with whom a company will do business or encounter require EINs.
Pennsylvania, Washington D.C., Iowa, Minnesota, Massachusetts, Alaska and New Jersey (according to "Business Tax Index 2008", Small Business & Entrepreneurship Council, April 2008).
Nevada, South Dakota, Washington, and Wyoming (according to "Business Tax Index 2008", Small Business & Entrepreneurship Council, April 2008).
California, Vermont, Oregon, New Jersey, Maine, Washington D.C., and Hawaii (according to "Business Tax Index 2008", Small Business & Entrepreneurship Council, April 2008).
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming (according to "Business Tax Index 2008", Small Business & Entrepreneurship Council, April 2008).
New Jersey, New York, California, Ohio, Rhode Island, Maryland, Iowa, Vermont, Nebraska, and Minnesota (according to "2009 State Business Tax Climate Index", The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates, and property tax rates).
South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon, and Delaware (according to "2009 State Business Tax Climate Index", The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates, and property tax rates).
Annual shareholder minutes typically include the election of your company's Board of Directors. Annual Board of Director minutes typically include the election of officers for the company. In addition, Board of Director minutes should be prepared in order to approve contracts and leases that the company enters into, additional issue of shares of stock, and approve other significant company events.
Shareholder and Board of Director Minutes should be prepared at least annually. However, it may be advisable to prepare Board of Director minutes more frequently in order to approve contracts and leases that the company enters into during the year, appoint any new directors, issue any additional shares of stock, etc.
Incorporating is a good way to protect your personal assets from claims against your business. However, in order to get this protection, you have to not only incorporate your business but also have to operate your business as a separate legal entity. For example, you should prepare Shareholder and Board of Director minutes, open a separate bank account in the name of the corporation, use stationary and business cards that make it clear that you are doing business as a corporation, enter into contracts in the name of the corporation, etc.
No. It is still possible for another company to use your company's name. The best way to protect against someone else using your company's name would be to get trademark protection of the name. A and A Incorporating Services offers trademark services.
The Nevada Secretary of State lists the following advantages, among others, for incorporating in Nevada:
- No Corporate Income Tax
- No Taxes on Corporate Shares
- No Franchise Tax
- No Personal Income Tax
- Nominal Annual Fees
- No Franchise Tax on Income
- No Inheritance or Gift Tax
- No Estate Tax
- Competitive Sales and Property Tax Rates
- Minimal Employer Payroll Tax – 0.7% of gross wages with deductions for employer-paid health insurance
- Nevada's Business Court developed the Delaware model to minimize the time, cost, and risks of commercial litigation.
Delaware is often referred to as a business-friendly State. According to the Delaware Secretary of State, Delaware has the most advanced and flexible business formation statute in the nation, and the Delaware Court of Chancery is a unique 215-year-old business court that has written most of the modern U.S. corporation case law. Delaware's State Government is business-friendly and accessible. According to the Delaware Secretary of State, these factors have all contributed to making Delaware a premier legal home to companies around the world. You do not have to live in Delaware in order to incorporate in Delaware.
Yes, a corporation can be owned by one person.
The only difference between an S corporation and a C corporation is how the corporations and their shareholders are taxed. By default, a corporation will be a C corporation unless the shareholders elect Subchapter S status by filing Form 2553, "Election by a Small Business Corporation," with the IRS. If a corporation has not elected Subchapter S status, the corporation will have to pay income tax on all of its income. If the corporation then distributes that income to its shareholders, the shareholders will have to pay income tax on those distributions. This results in double taxation (once at the corporate level and again at the shareholder level). On the other hand, if a Subchapter S election has been made, as a general rule, there will be no tax on the corporation, and the income will be taxed only to the shareholders. Subchapter S corporations often are referred to as "pass-through entities" since, for tax purposes, the income is treated as if it passes through the corporation without taxation to the shareholders, who then pay income tax only once on this income. Limited Liability Companies (LLC) and partnerships also are "pass-through entities."
A family limited liability company is an LLC that is used to hold title to family assets (for example, real estate), a family business and/or investments. All family members could be members (owner) of the limited liability company or the parents could be the initial members and, over time, gift limited liability company membership interests to their children (or other beneficiaries). Family limited liability companies often are used to minimize estate taxes since membership interests typically can be transferred between generations (for example from parents to children) at lower tax rates than would apply if there were no limited liability company. For estate and gift tax purposes, the valuation of assets held in a family limited liability company may be discounted for valuation purposes and, therefore, less estate or gift tax may be incurred.
Yes. You are not required to live in a particular State in order to incorporate a limited liability company in that State.
If you are going to operate a business or hold assets in a corporation, limited liability company, limited partnership or trust, then that corporation, limited liability company, limited partnership or trust will need an Employer Identification Number. This is required in order for the company to file tax returns, open a bank account, apply for a business license and for a host of other purposes.
California, Vermont, Oregon, New Jersey, Maine, Washington D.C. and Hawaii (according to “Business Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming (according to “Business Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).
New Jersey, New York, California, Ohio, Rhode Island, Maryland, Iowa, Vermont, Nebraska, Minnesota (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).
South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon and Delaware (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).
No. An Operating Agreement is an internal document. It is not required to file an Operating Agreement with the Secretary of State or any other government agency in connection with the formation of the limited liability company. Many banks, however, will ask to see a copy of your company’s Operating Agreement in order to open a bank account for the company.
An Operating Agreement is one of the organizational documents that should be prepared for every limited liability company. Operating Agreements typically set forth the relative rights, preferences and privileges of the members, the authority of the company’s manager, whether or not the company will have officers, etc.
One of the benefits of a limited liability company is that you don’t have to follow the corporate formalities that are required of corporations, including the need to prepare minutes. However, it often is advisable to prepare minutes even for limited liability companies so that you have a record of what matters were approved by the members of the company.
No. It is still possible for another company to use your company’s name. The best way to protect against someone else using your company’s name would be to get trademark protection of the name. A and A Incorporating Services offers trademark services.
No. It is still possible for another company to use your company’s name. The best way to protect against someone else using your company’s name would be to get trademark protection of the name. A and A Incorporating Services offers trademark services.
Yes, one person may own a limited liability company (LLC). An owner of a limited liability company is referred to as a “member” of that limited liability company.
Yes. You do not have to live in the State in order to form a limited partnership in that State.
Unless the limited partnership does not engage in any business activities and does not file any tax returns then all limited partnerships should obtain an EIN. In addition, most banks will require an EIN in order to open a bank account for the limited partnership and other business partners or vendors will require an EIN in order to do business with the partnership.
California, Vermont, Oregon, New Jersey, Maine, Washington D.C. and Hawaii (according to “Business Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming (according to “Business Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).
New Jersey, New York, California, Ohio, Rhode Island, Maryland, Iowa, Vermont, Nebraska, Minnesota (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).
South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon and Delaware (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).
If the partners do not enter into a limited partnership agreement, then the relationship between them, and their respective rights, obligations and duties will be unclear. Should a dispute arise between the partners in the future, without a limited partnership agreement, it will be difficult for the parties, a court or other trier of fact to determine the rights, obligations and duties of the parties. This could lead to time-consuming and costly litigation. Typically, a limited partnership agreement will address such topics as identification of the partners, required contributions to the capital of the limited partnership, how the profits of the partnership will be distributed to the partners, how the income and loss of the partnership will be allocated to the partners, dissolution of the limited partnership, restrictions on transfer of partnership interests, etc.
A limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. Similar to a limited partnership, the LLLP consists of one of more general partners and one or more limited partners. The general partners manage the business operations of the LLLP, while the limited partners typically only maintain a financial interest. The key advantage of this form of ownership is that the general partners receive limited liability on the debts and obligations of the limited liability limited partnership. Limited liability limited partnerships often are used for investment in real estate, although it also is available for other businesses. Not all States permit the formation of limited liability limited partnerships. Many require the formation of limited partnerships first, then registration of that limited partnership as a limited liability limited partnership. Some of the States in which an LLLP can be formed are Arizona, Colorado, Delaware, Florida, Georgia, Nevada and Texas.
A general partnership is a business arrangement between 2 or more people. A partnership is created by default when 2 or more people are engaged in business but have not formed another entity, such as a corporation, an LLC or a limited partnership. In a general partnership, every partner has the ability to actively manage and control the business and each partner also are responsible for all of the debts and liabilities of the partnership. There is no limit to this exposure for the debts and liabilities of the partnership. Personal assets of the partners may be used to satisfy business debts and liabilities if necessary. A limited partnership, on the other hand, provides protection for the limited partners of the limited partnership from the debts and liabilities of the limited partnership. A limited partnership must have at least 2 partners, one general partner and one limited partner. Unlike the limited partners, general partners of a limited partnership are responsible for the debts and liabilities of the partnership. Personal assets of the general partners may be used to satisfy business debts and liabilities if necessary. The general partner(s) of a limited partnership are responsible for operating and managing limited partnerships. Limited partners typically are silent investors and do not get involved in operating or managing limited partnerships. In most States, unlike a general partnership, to form a limited partnership Articles or a Certificate of Formation must be filed with the State (usually the Secretary of State’s office) in order to form a limited partnership.
No. It is still possible for another company to use your company’s name. The best way to protect against someone else using your company’s name would be to get trademark protection of the name. A and A Incorporating Services offers trademark services.
A family limited partnership is a limited partnership that is used to hold title to family assets (for example, real estate), a family business or investments. All family members could be partners in the limited partnership or the parents could be the initial partners and, over time, gift limited partnership interests to their children (or other beneficiaries). Family limited partnerships often are used to minimize estate taxes since partnership interests can be transferred between generations (for example from parents to children) at lower tax rates than would apply if there were no limited partnership. For estate and gift tax purposes, the valuation of assets held in a family limited partnership may be discounted for valuation purposes and, therefore, less estate or gift tax may be incurred.
Most businesses can be organized as limited partnerships. However, limited partnerships are most commonly used for businesses that have been formed for the purposes of investing in real estate.
Like all other corporations, non-profit corporations should have bylaws and organizational minutes.
Yes. A person does not have to be resident of a particular State or of the United States in order to form a non-profit corporation.
The only way to ensure that a non-profit will be treated as a tax exempt entity by the IRS, State and other taxing authorities is to file IRS Form 1023, “Application for Recognition of Exemption” (or other appropriate Form). In addition, depending on the State in which the business is conducted, an application for exemption will have to be filed with the appropriate State taxing authority.
No. Non-profit status and tax exempt status are different things. As a general rule, in order to be tax exempt, a corporation must be incorporated as a non-profit corporation. However, IRS Form 1023, “Application for Recognition of Exemption,” (or other appropriate Form) must be filed with the IRS. In addition, most States require a separate filing in order to be tax exempt on the State level.
Your company will be suspended by the State which could have adverse legal consequences to you.
Yes. A and A Incorporation Services is able to provide you with registered agent services in all 50 States.
Yes. All non-profit corporations must have a registered agent and that registered agent must be located in the State in which you are incorporating.
Yes. All professional corporations must have a registered agent and that registered agent must be located in the State in which you are incorporating.
Yes. All limited partnerships must have a registered agent and that registered agent must be located in the State in which you are incorporating.
Yes. All limited liability companies must have a registered agent and that registered agent must be located in the State in which you are incorporating.
In most States, all corporations must have a registered agent and that registered agent must be located in the State in which you are incorporating.
A registered agent is responsible for receiving important legal and tax documents on behalf of the company. These include pleadings in connection with lawsuits, annual report and tax information. Registered agents must have a physical address in the State of formation or qualification of the business. Post office boxes will not be sufficient. The registered agent’s address is a matter of public record and easily accessible via the internet. For this reason, many people choose to have a company like A and A Companies, Inc., to act as their registered agent.
A registered agent is a person or entity that is designated by you in the records of the Secretary of State’s office to accept service of process for your company if it should be subjected to a lawsuit and to receive other official communication from State agencies. In almost all States, every corporation, LLC, limited partnership and other entity must designated a registered agent in its Articles of Incorporation, Certificate of Formation, etc.
Yes. Just like all other corporations, professional corporations should have bylaws, organizational minutes and stock certificates.
Yes. You do not have to live in a particular State in order to incorporate a business in that State. However, before you can practice your profession in that State, you will have to comply with that State’s licensing requirements. In addition, many professional boards or agencies require that, if you are going to practice a profession through a corporation, that corporation has to be formed in the State in which you are going to practice.
Incorporating is a good way to protect your personal assets from claims against your business. However, in order to get this protection, you have to not only incorporate your business, but you also have to operate your business as a separate legal entity. For example, you should prepare Shareholder and Board of Director minutes, open a separate bank account in the name of the corporation, use stationary and business cards that make it clear that you are doing business as a corporation, enter into contracts in the name of the corporation, etc. In addition, many States limit a professional’s ability to insulate himself or herself from professional malpractice by forming a corporation.
If you are engaged in a profession that requires that you obtain a license from a State licensing agency in order to engage in that profession and the State in which you are working permits professionals in that profession to provide professional services through a corporate entity then, yes, you can incorporate as a professional corporation. What professions qualify will depend on the particular State. As a general rule, most States permit accountants, attorneys, chiropractors, dentists, medical doctors, psychologists, physician assistants and other health care professionals to incorporate and provide professional services through a professional corporation.