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US CorporationsWe will try to provide you with information for each State in the US, including a brief description of the corporate law and the benefits and requirements for incorporation within that state.
The following classification applies to all States: General "C" Corp | Close Corporations | "S" Corporation | Limited Liability Corporations (LLC) | Not For Profit "501(c)(3)" General "C" CorpThe General or "C" Corp is the most common type of corporation which allows for an unlimited number of shareholders. Shareholders are not personally liable for the debts of the Company. Shares of stock are transferred with ease. It may raise capital by the issuance of shares, and is used for public companies which are traded on stock exchanges. The principal disadvantage of this structure is double-taxation of the profits of the company. Shareholders elect board of directors to appoint officers for day-to-day management. Board of directors, formal meetings, minutes and annual State reports are required. Close CorporationThis type of entity, where available, limits the number of stockholders to approximately 30. Shareholders are not personally liable for the debts of the Company. Shares of stock are transferred with ease. The stock of a close corporation cannot be publicly traded and there are some limitations on the transfer of stock. It is also subject to double-taxation on the profits of the company. Shareholders elect board of directors to appoint officers for day-to-day management. Board of directors, formal meetings, minutes and annual State reports are required. "S" CorporationShareholders are not personally liable for the debts of the Company. A general corporation may elect to become an S corporation by preparing IRS form 2553. The corporation must make the election within 75 business days of the date of incorporation in order to elect that tax year. S corporations avoid double taxation because the profits and losses are reported on the personal tax returns of the shareholders. Recently, the maximum number of shareholders of an S corp. was increased from 35 to 75. Shareholders elect board of directors to appoint officers for day-to-day management. Board of directors, formal meetings, minutes and annual State reports are required. There are some restrictions with an S corp. so we encourage that you seek advice of an accountant or attorney before making the S election. LLC - Limited Liability CorporationThe LLC combines the pass through taxation advantages of a partnership or S corp. and the limited liability aspect of a corporation. Members are not personally liable for the debts of the LLC. Not taxed at entity level if properly structured. Any profit/loss is passed through directly to the members. The main differences between the LLC and the corporation is that LLC's cannot have or issue stock and in some states the LLC can only exist for a maximum of 30 years. Potential to sell interests in order to raise capital are contingent upon operating agreement restrictions. Members have an operating agreement that outlines management responsibilities. Transfer of your interest in an LLC is contingent upon operating agreement restrictions. Less formal meetings and minutes are required than for corporations. However, State reporting required. Not For Profit or "501 (c)(3)A corporation that is restricted from having or selling stock. Any income or profit cannot be passed to the directors, officers or members. A non-profit seeking tax exempt status must apply with the IRS. We recommend that you seek assistance from an attorney or accountant when applying for tax exempt status. *We prepare generic non-profit Articles of Incorporation and therefore recommend that your attorney or accountant prepare the incorporation documents so that it meets the IRS requirements under Section 501 (c)(3). For more information, please send us an email. |
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Last edited: 27-Oct-2009 © Koru Corporate Services, Inc. 2006 - 2007 |
