Advantages and Disadvantages of a Corporation

You can draft bylaws either before or after you’ve submitted your corporate formation documents. Issuing stock can be complicated, and it must be done in accordance with securities laws. Large corporations must register their stock offerings with the federal Securities and Exchange Commission (SEC) and the state securities agency. Registration takes time and typically involves extra legal and accounting fees. Your state’s corporations office can tell you how to find out whether your proposed name is available for your use. Often, for a small fee, you can reserve your corporate name for a short period of time until you file your articles of incorporation.

An S corporation, sometimes called an S corp, is a special type of corporation that’s designed to avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners’ personal income without ever being subject to corporate tax rates. Articles of incorporation, or certificates of incorporation, are required to document the formation of a corporation. The fees to register a corporation vary from state to state, but they often cost a couple hundred dollars. This is different than, say, a sole proprietorship, which exists automatically without owners having to pay any filing fees.

Forming a Business Corporation in New York

In addition to filing fees, you’ll have to pay for things like business license fees. And you’ll have to do this in every state, and potentially every county, in which you operate. A corporation is created when it is incorporated by a group of shareholders with a common goal who share ownership represented by their holding of stock shares. However, some corporations, such as charities or fraternal organizations, are nonprofit or not-for-profit. A corporation is owned by its shareholders and shareholders make a contribution to the corporation for shares of ownership.

• Formally establishing a corporation, limited liability company (LLCs), limited partnership and other business entity is the first step to doing business in New York State.
• A corporation is a legal entity separate and distinct from the individual(s) who compose the business.
• In corporations, however, the shareholders rights depend upon how many shares they own.
• Once your corporation has been officially formed and bylaws have been drafted, hold a meeting of the initial board of directors.

Using this approach, you could issue 1,000 shares each to four stakeholders at a value of zero dollars (or “no par”), and no money will need to be exchanged. Whatever the initial value of the stock, it is always possible to sell it for more—whatever an investor is willing to pay—at a later date, so don’t feel locked-in to this early decision. Put simply, you’ll issue stock to formalize which people have what amount of ownership stake in your new company. If you used an incorporation service, they might have sent you a nice binder with your bylaws template, stock certificates, and maybe even a nifty corporate seal embosser (neat!). If you are working with a lawyer, you should get their feedback on the name you choose. If not, you can send a name availability inquiry letter to your state’s Secretary of State office yourself.

Who needs to file Form SS-4?

Certificates of Incorporation submitted via fax with the Credit Card/Debit Card Authorization Form must specifically indicate the level of expedited processing requested. A Certificate the “new” irs independent contractor test of Incorporation form has been developed to meet the basic requirements of the Business Corporation Law. The form does not include any optional provisions permitted by law.

If you’re an entrepreneur looking to become a small business owner, one of the first things you’re going to have to decide on is how to structure your company. Business structure options include sole proprietorships, general partnerships, limited liability companies, and corporations. A corporation is a separate legal entity from its owners, offering liability protection for each owner’s personal assets. Corporations are generally governed by a board of directors elected by the shareholders. Formally establishing a corporation, limited liability company (LLCs), limited partnership and other business entity is the first step to doing business in New York State.

What is Form W-4 for?

However, if you will sell your products or services under a different name, you must file a «fictitious» or «assumed» name statement with the state or county where your business is located. Once you’ve found a legal and available name, you usually don’t need to file the name of your business with your state. When you file your articles of incorporation, your business name will be automatically registered. A fun (and useful) fact is that the lowest value a new share can have is zero dollars. It may seem odd, but this can be the simplest option for a company that doesn’t need cash to start.

Everyone who earns income, except tax-exempt individuals, must file Form 1040. Any business that pays wages to an employee must file that quarter. Corporations can be a good choice for medium- or higher-risk businesses, those that need to raise money, and businesses that plan to «go public» or eventually be sold.

Form a Corporation or Business

Prepare and execute stock certificates, and update the corporation’s share ledger. The share ledger keeps track of who owns shares and how many they own. Corporations are required to keep track of how many shares they issued, who owns them, and how many are outstanding. If you’ve weighed the pros and cons and determined that a corporation is right for you, you’re likely curious about what to do next. Starting a corporation is a bit tedious, so it’s critical that you’re diligent during the registration process. The following is a step-by-step guide to creating a C corporation.

It’s important to find the right balance of legal protection and corporation benefits that meet your specific needs. If you plan on doing business under a name other than your corporation’s official name, you will also need to register a DBA name. The DBA name is also known as “doing business as” or a “fictitious business name.” Depending on where you’re located, you may need to register the DBA with your state, city and county. If you’ll only be using your official corporation name in your business, you can skip this step. A corporation is required to obtain an EIN, and you’ll need it to open a bank account, set up payroll withholding and set up state tax accounts.