Trying to figure out what type of business structure best suits your needs can be overwhelming. The Law Office of Kimberly R. Simms will take the time to explain the various types of business entities that exist, such as Sole Proprietor, C Corp, S Corp and Limited Liability Companies (LLCs) and help you choose the proper entity that best fits your business goals and objectives. The Law Office of Kimberly R. Simms will take all the necessary steps to properly form your business, maintain your business entity, and provide assistance to wind-up and dissolve your business if and when the time comes. Forming the proper business entity ensures that you are building your business on a strong foundation.
Business Counseling and Formation services provided by The Law Office of Kimberly R. Simms include but are not limited to:
- Assist clients in choosing the proper legal entity
- Analyze whether any special permits or zoning laws pertain to your business
- Perform a name search with the Secretary of State to ensure your chosen business name is free and clear at the state level
- Formation of Corporation including articles of incorporation, bylaws and other required documents
- Formation of Limited Liability Companies including articles of organization, operating agreement, and other required documents
- Formation of Nonprofit Mutual Benefit Corporations for Collectives or Cooperatives
- Prepare and file Statement of Information with Secretary of State (annually or biennially depending on the entity type)
- Obtain Federal Employer Identification Number from the IRS
- Prepare and File relevant license and permits such as Sellers Permits, Business Licenses, and Ficticious Business License
- Prepare and draft additional operational documents and contracts
The easiest way to be in business for yourself is as a “sole proprietor.” This means you are the owner of a one-person business. There are very few steps one must take to form a sole proprietorship other than getting a business license and applying for a sellers permit if required. The major draw back to sole proprietorship is that the owner is 100% personally liable for all business debts and legal claims.
A “C” corporation is another name for a regular for-profit corporation, which is taxed under normal corporate income tax rules. A corporation can have as many or as few shareholders as it wants and the corporation provides all of its owners with the benefits of limited liability personal protection. The Corporation itself is taxed separately from its owners. This means that corporate owners pay individual income taxes on the salary amounts they received, not on all the net profits of the business. The corporation pays corporate taxes on the net profits retained in the business.
An S corporation is a corporation that qualifies for special tax treatment under the Internal Revenue Code. Forming one requires the same paperwork as a regular C Corporation with one additional step: shareholders will elect to treat the corporation as a flow-through entity. This is accomplished by filing IRS Form 2553. Generally, an S corporation may not have more than 100 shareholders who must be U.S citizens or certain types of trusts. S corporations also enjoy personal limited liability from the debts and liabilities of the corporation. Profits and losses pass through the S corporation and are reported on the individual tax returns of the shareholders. This means that any profits retained at the end of the year are not taxed at corporate tax rates but rather are passed through to the owners.
A limited liability company (LLC) is a unique business structure. LLCs combine the pass-through taxation of a partnership or sole proprietorship and also create limited personal liability for its owners, the same legal protection the owners of corporations enjoy. LLCs are available for most types of businesses and also allow for a flexible management structure as well as flexible distribution of profits and losses.