When it comes to the organizational framework of a new company, entrepreneurs have several different legal structure choices available to them. An example is to start an LLC or a corporation. Because each of these structures offers a unique set of advantages and disadvantages, you must choose the organizational form that is most suitable for your company. This article will discuss the processes involved in forming a limited liability company (LLC) or a corporation using the appropriate paperwork. In addition, we will talk about the advantages and disadvantages of each available choice. By the time you conclude this piece, you will know the necessity to make an educated choice about the organizational structure that is most suitable for your company.
Make Sure You Choose the Right Entity Type
Two primary options for forming a business are an LLC (limited liability company) or a corporation. An LLC is ideal if you want to run a one-person company out of your home, such as a freelance writing firm. You’ll also need to consider the level of formality appropriate for your company. It’s possible to establish an LLC and function informally without the need for yearly meetings or minutes of the meeting. A more formal set of processes, such as those needed for companies, may be necessary if you want to launch a bigger company and seek outside investment money. Whether you decide to start an LLC or a corporation, check to see if your business name is already taken according to sba.gov. Before incorporating an LLC or a company, check with your state’s Corporations Division or Business Entity Division to see whether the desired name is already used. This will prevent any confusion down the road (such as running into someone with the same name).
File The Appropriate Paperwork with Your State
If you’re establishing a company, it can make more sense for you to start an LLC or a corporation after you have already established your firm and made it into a lucrative endeavor instead of starting one from the beginning. Additionally, you must submit the required documentation with your state to confirm that your business or LLC is functioning lawfully. If you don’t submit this documentation properly, you might end up paying more than you’d meant because of fines and other costs. There is also something called “state franchise tax,” which mandates firms to pay a yearly charge depending on their earnings over the year. You aren’t obliged to pay this cost if your company doesn’t generate any money, so if you’re still in the process of starting your firm and haven’t produced any profits yet, then this fee won’t be relevant to you.
Choose A Registered Agent
A registered agent is still another step in the process. You need a registered agent if you need someone to accept legal and tax paperwork on your behalf. The registered agent may be any company that has a physical location in most states of the United States. The registered agent’s address may be used to receive mail, and the registered agent will sign for it and send it to the appropriate person in your company. When using someone else’s address, remember that if they relocate before you’re ready to receive mail at your new location, you may want to have them sign up for an official forwarding service.
Having a registered agent in place is critical for the correct registration of your firm in each state where you conduct business, so be sure to include their details on all important papers (including your Articles of Incorporation). It’s important to locate a registered agent who is nice enough to cope with your company’s obligation of being the go-between between you and the rest of the world.
Draft Bylaws or Operating Agreement
An LLC or corporation might be described as a distinct legal entity from its owners. To put it another way: If you create a firm as an LLC or corporation, you can’t simply sit back and collect money; you need to make sure it’s being handled properly—or else you might be held responsible for any mistakes. There must be a clear understanding of what each person’s responsibilities will be, as well as the authority they will need to carry them out. The bylaws and operating agreements that most LLCs and corporations have spell out the responsibilities of the members and shareholders and the authority they are expected to have over the company’s day-to-day operations. You’ll need an attorney to draft your bylaws or operating agreement for various reasons. Bylaws and operating agreements must be prepared under the laws of each state.
At the Corporation Center, we offer everything you need in one convenient location. A toll-free phone line is available for those who want to speak with a member of our trained staff. We can assist you to start an LLC or a corporation. You can rely on our professionals to guide you through the process and address any concerns you may have along the way. We can assist you in steering clear of frequent blunders and get your company off to a good start. You may reach us at (800) 580-4870 at any time.