KeyIncorporators.com
Frequently Asked Questions
Over the years, based on on the feedback we have received from our clientele, we have compiled an extensive list of the most frequently asked questions. Simply click on any of the links below to obtain answers to your questions.
| Incorporate or Form an LLC | |
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Corporation
- What is a corporation?
- What are the benefits of a corporation?
- Do I have to hire a lawyer or an accountant to incorporate?
- Naming the corporation.
- What is an S corporation?
- What are the advantages of an S Corporation?
- What is a corporate kit and what is it used for?
- Registered Agent?
- How do I get my corporation filed?
The corporation is a legal entity apart from the owners of the business. In essence, a corporation is separate and distinct from the owners, or shareholders, of the corporation. A corporation can own property, enter into contracts, have assets and conduct business under its own name. back to top
What are the benefits of a corporation?
The primary benefit a corporation offers is that it protects the shareholders (owners) against personal liability. A corporation offers this protection because it is a legal separate entity apart from the shareholders. As such, a corporation is responsible for its own debts.
Moreover, a corporation offers several tax benefits to its shareholders. A corporation can limit the amount of taxes it owes by taking legitimate and legal deductions. Any expense, that is utilized in the course of doing business, is commonly referred to as deductible business expenses. For example, rent; employees' salaries, utilities, motor vehicles, cost of good sold, are considered deductible business expenses.
Other advantages of owning a corporation include the fact that the sale of stock may be more attractive to investors than other forms of equity. Also, a corporation’s existence is perpetual thus allowing for it to exist beyond its founders. A corporation also has other financial and tax benefits including setting up pensions, profit sharing arrangements, and establishing stock option plans. back to top
Do I have to hire a lawyer or an accountant to incorporate?
While we can not offer you legal or accounting advice, there is no legal requirement to hire an attorney or an accountant to incorporate. Leave the work to us and save money on attorney and accountant fees. Simply fill out on our online order form to proceed. back to top
You are free to choose any name prefer. As part of service we perform the name check for you. The general rule is that the name must not be the same as another corporation. Moreover you must follow the company name you choose with a corporate ending of one of the following: "Inc" , "Co", "Incorporation", "Corporation", "Company", "Limited", or "LTD". Note: "Inc" is the most common and preferable designator. back to top
An S corporation is a corporation that has elected a special tax status with the IRS. This tax treatment allows the income of the corporation to be treated like the income of a partnership or sole proprietorship; the income is "passed-through" to the shareholders. The pass through taxation of an S corporation offers a great advantage over C corporations which may be subject to double taxation.
That is, a C Corporation, for any profits generated, is first taxed at the corporate level.Thereafter, when a shareholder receives a distribution of those profits, they are taxed at the personal level. Hence, the term "double taxation".
An S corporation, on the other hand, allows income, deductions, and losses to be passed through the S corporation to the individual tax return of each shareholder. This is the essence of "pass-through" taxation, i.e., the income is passed through to the shareholders. Therefore the shareholder's individual tax returns report the income or loss generated by an S corporation. In order to avoid double taxation, a large number of our clients, elect to be treated as an S Corporation.
After formation if you desire to be an S corporation, we prepare an application form for the IRS. Upon granting of this designation by the IRS (which we have a 100% success rate with our clients) you are then designated an S Corporation. On our order form, simply choose the S Corporation option on the drop down menu and we will take care of all the rest. back to top
What are the advantages of an S Corporation?
For the average small business, the main advantage of an S corporation is the avoidance of double taxation. That is, the avoidance of payment of income tax on corporate net income, and then the payment of a further tax on the dividend income that is derived from the corporation. As we have stated in the previous question, an S corporation allows income, deductions, and losses to be passed through the S corporation to the individual tax return of each shareholder. This is the essence of "pass-through" taxation, i.e., the income is passed through to the shareholders.
Note: In order to qualify for S corporation status, shareholders must number fewer than 75. These shareholders must be individuals. Furthermore, the shareholders can not be non-resident aliens. back to top
What is a corporate kit and what is it used for?
When filing for a corporation, the corporate kit is commonly required in most states to open a corporate bank account. The kit includes a professional tailored binder with your business name along with a matching slip case, customized handheld steel embosser, custom steel corporate seal, twenty custom stock certificates, stock transfer ledger, and other assorted necessities. The stock ledger serves the purpose for transaction records. Also, the kit includes the corporate minutes and by laws. The price for a corporate kit which you will find on the order form is only $99 which also includes free Fed Ex shipping!.
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All states require that your corporation maintain a registered agent. A registered agent is simply a person that is designated to receive documentation (mail or service of process for example) on behalf of the corporation. Quite frequently you can act as your own registered agent if you reside within the state of the incorporation. To reduce incorporation costs many of customers prefer to act as registered agent for the corporation being formed. However, we can gladly assist you with registered agent services if you so desire, such as in the case where there is no physical address in the state of incorporation. back to top
How do I get my corporation filed?
In order to get your corporation filed, simply visit our online order form. Upon receipt of your order, Keyincorporators will, in addition to paying the required state filing fees, complete and file all the necessary documentation to file and complete your company formation. back to top
What is a Limited Liability Company?
A Limited Liability Company or LLC is a separate business structure from the owners (known as members) of the LLC. An LLC ,can be viewed as a hybrid of a corporation and a partnership. An LLC is similar to a corporation as the members are shielded from personal liability. An LLC is similar to a partnership as profits and loses pass directly to the members without taxation of the LLC itself. Therefore, an LLC offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation. back to top
What are the advantages or benefits of an LLC?
An LLC or limited liability company offers two primary benefits:
Protection from Personal Liability: One of the primary benefits is that an LLC offers it 's members protection from personal liability.
Pass-Through Taxation: An LLC offers pass-through taxation. This is a significant tax benefit as the earnings of the LLC are only taxed once via pass-through taxation.
Other benefits of an LLC include:
Limited Liability: For the members of an LLC, liability is limited to the amount of capital which the member has invested in the LLC. Thus, LLC members are offered the same liability protection as if they were shareholders of a corporation.
Flexible Ownership & Management Structure: In general, LLC's are free to set up any organizational structure agreed upon by its members.
Moreover, an LLC, in addition to conferring limited liability and flexibility of ownership and management, offers free transferability, continuity, and centralized management. back to top
What is the organizational structure of an LLC?
In general an LLC is owned by the members (also known as owners) of the LLC. The LLC may be managed by its members. Management by the members is the most typical method for a small business. In fact, member management, is the normal default rule of state law. If management is by the members then each member is a manager of the company. If the LLC is managed by its members, it operates like a partnership. That is, in member managed LLC's, each member of the LLC has an equal say in the management of the LLC.
In the alternative, such as in an extremely large company, if the members choose, the LLC may have a manager oversee the LLC.
Note: On our order form we allow you to choose how you would like the management of the LLC set up. back to top
You may choose any name name for the LLC that you desire. However the name must not be the same name of an existing LLC. When you place an order with us, we will promptly perform the name check for you. If your name is unavailable we will immediately call and email you for another name. back to top
What is the LLC Kit and what is it utilized for?
After we complete the filing of your LLC, your LLC can hold an organizational meeting wherein an operating agreement, which is included in our LLC Kit, is adopted. In addition, membership certificates can be handed out to members of the LLC. These membership certificates, which are also included in our LLC Kit, indicate the particular holder's percentage of ownership in the LLC. This issuance of certificates, is, in essence, how ownership of the LLC is evidenced.
All the above information can be maintained in a LLC record book, which is likewise included in the LLC Kit. Specifically, the LLC kit includes a professional customized binder with the LLC name and matching leather bound slip case, customized steel LLC seal, 20 custom membership certificates with your LLC's name , sample operating agreement and transfer ledger.
Note: In several states, the LLC Kit w/ seal is necessary to open a bank account under the LLC. Furthermore, the LLC Kit can be found on our Order Form. back to top
Upon receiving your completed order, Keyincorporators will file and execute all the necessary documentation to file your LLC. To place an order, simply utilize our online order form. back to top