- What are the different types of Corporations?
- What is a “C” Corporation?
- What is a Professional Corporation?
- What is an “S” Corporation?
- How is a Corporation formed?
- What do you name a corporation?
- How long does it take to form a corporation?
- Does a corporation need a registered agent?
- Does a corporation need a tax number?
- How is a corporation taxed?
- Can one person form a corporation?
- Are there directors or shareholders in a corporation?
- Who manages the corporation?
- Is there a difference between a filing for a profit corporation and a non-profit corporation?
- What are some of the advantages of incorporating?
- What are some of the disadvantages of incorporating?
- Is an accountant or attorney needed to incorporate?
What are the different types of corporations?
In general terms, all corporations are separate legal entities. To form a corporation, Articles of Incorporation need to be filed with the state one wishes to incorporate within. Each individual state has its own particular requirements, fees, taxes and responsibilities. In addition, each state has different types of corporate structures depending on the type of product or services rendered. You can select to become a “C” corporation, a Professional corporation, a Non-Profit corporation or an “S” Corporation. All Corporations, regardless of the type, are separate entities.
What is a “C” Corporation?
Essentially a “C” corporation is a separate legal entity that is formed as a for-profit corporation. There are a certain number of shares of stock issued at incorporation and directors and officers are designated. The corporation, being a separate entity, pays applicable to taxes to both the state and federal government.
What is a Professional Corporation?
For most purposes a professional corporation is essentially the same as a “C” corporation except that the corporation performs professional services such as medical services, legal services or accounting services. The designation is a state designation with any federal requirements being the same as a “C” corporation.
What is an “S” Corporation?
An “S” corporation is essentially the same as a “C” corporation, but it has chosen a special tax status with the Internal Revenue Service. They both have shares of stock, directors and shareholders. The special tax status allows the “S” corporation to pass through the profit or loss to it’s shareholders. This eliminates the issue of double taxation. Not all states recognize the “S” status, but the majority does. To obtain the “S” status the corporation must file form 2553 with the Internal Revenue Service and have to make a similar election with some states.
How is a corporation formed?
In order to form a corporation, Articles of Incorporation must be filed with the required state fee. This is all provided when you order through Speedy.
What do you name a corporation?
The name you select for your corporation must be distinguishable form any other corporation within your state. The purpose of this is to make sure your name is unique and will not be confused with another company. Each state has different requirements with selecting a name. If the name you select does not comply with state standards, Speedy will promptly contact you for correction. When selecting a name you must make sure it ends with the words “Corporation, Incorporated or the abbreviation Inc.”. In the event that you first name selection is not available, we select the second and third until we have an available name.
How long does it take to form a corporation?
The Speedy Incorporation order form takes less than 15 minutes to complete. We process your Articles of Incorporation within 24 hours with the state you choose. Each state has different time frames which it completes the filing process. Some states take as little as an hour while others can take several weeks. Speedy has no control over the state processing time. Some states offer an expedited service at an extra charge. The Speedy order form allows for the expedited service for the states which offer it.
Does a corporation need a registered agent?
Yes. All corporations need a registered agent with a physical street address within the state of formation. This allows a location for any type of legal documents or tax documents to be delivered to if they are returned from the company designated address. Should you wish to form a corporation in a state other than your own or do not wish to be the registered agent yourself, Speedy can provide registered agent services for a nominal fee.
Does a corporation need a tax number?
All corporations need a Federal Identification Number. This is the same thing as an Employer Identification Number or an E.I.N. and is used as an identification number for the corporation. This number is obtained from the Internal Revenue Service by filing Form SS-4. Some states use the same number but others require filing for one with the particular state. All this is included as part of the Speedy order process with the complete package or EIN form completion can be ordered as an add-on service for a low cost. See services and pricing for more details on our fees and packages.
How is a corporation taxed?
A corporation is taxed as a separate entity. An “S” corporation has all the profits and losses passed through to the shareholders who are then taxed at a personal level.
Can one person form a corporation?
A corporation can be formed by one person. Each state varies as to the amount of directors a corporation must have and other requirements such as age and residency. See our state map to find specific information relating to your state.
Are there directors or shareholders in a corporation?
Yes. The shareholders are the owners of the corporation. Each state requires a certain amount of directors/officers. Some only require one while others require three. A shareholder can also be a director/officer.
Who manages the corporation?
A corporation is owned by its shareholders but is not necessarily managed by them. The shareholders elect directors who manage the corporation by appointing officers to handle the day-to-day activities. Most of your small corporations are managed by its shareholders.
Is there a difference between filing for a profit corporation and a non-profit corporation?
The differences with a profit and a non-profit corporation are numerous with states and the Internal Revenue Service. Filing fees for non-profits are generally much less than profit corporations. Most states require that non-profits obtain the non-profit status from the Internal Revenue Service prior to registering with a states taxing agency. A non-profit corporation is complex and is subject to different laws and regulations than a profit corporation. Forming the non-profit corporation is fairly simple and similar to a profit corporation, but completing the requirements to function as a non-profit can be difficult. Should you wish to form a non-profit corporation, Speedy will be glad to form the non-profit, but we ask that you seek the advice of an attorney or accountant to understand the additional requirements. If you feel you’ve done adequate research and are comfortable with all the requirements, just complete the order form and Speedy will form your non-profit.
What are some of the advantages to incorporating?
- The biggest and most popular reason for forming a corporation is the liability protection it offers to its shareholders. For most purposes the individuals that own the corporation are not liable for the debts and obligations of the corporation.
- The corporations life is unlimited. A corporation does not cease to exist until it is dissolved with the state.
- Centralized management.
- Capital can be raised through the sale of the corporation stock.
- See our business types comparison chart here.
What are some of the disadvantages to incorporating?
- First most is the issue of double taxation. Corporate profits are taxed as a corporation and then as dividend income when distributed to the shareholders.
- Federal and state laws have strict record keeping requirements.
- Due to the complexity of corporations, there is an increased possibility of needing professional assistance in regard to legal matters and taxation.
- See our business types comparison chart here.
Is an accountant or attorney needed to incorporate?
Absolutely not. Any individual can process the required documents with any state. One should make sure that they are aware of and understand all the requirements of the selected state before forming the limited liability company. If an individual is unsure of, or does not understand the legal or financial ramifications of forming a corporation, they should seek the advice of an attorney or accountant. Speedy does not offer any legal or accounting advice in the selection process. Speedy Incorporation and LLC completes the required documents necessary to form a corporation avoiding the costly fees.