What is an LLC?

The Limited Liability Company is a relatively new entity type that was developed towards the end of the 20^th century as an alternative to a corporation. Modeled after a German entity type (GmBH), the US LLC originated in Wyoming in the late 1970s, emerged in Florida a decade later and by the early 1990s existed in all US jurisdictions. Since that time limited liability companies have steadily gained in popularity largely because they combine liability protection previously reserved for corporations with single taxation of partnerships. LLCs also have fewer requirements than corporations making them easier to maintain. LLC's are separate and distinct from its owners who are called "members."  LLC's do not issue shares of stock like C Corporations and S Corporations. If you would like to read about S Corps and C Corps check out our blog here.

Ownership/ Member details about LLC's

There are 2 ways to reflect ownership of an LLC.  It can be reflected as a percentage or by membership units which are similar to shares of stock in a corporation. The number of members of an LLC is unlimited and members can be individuals, partnerships, corporations, trust, nonresident aliens, etc.

Things to know about LLC's

• Limited Liability- Absent any specific personal guarantees, the amount at risk for members is limited to their investment in the LLC. The personal assets of the members are generally beyond the reach of creditors. This protection is for all members of the LLC unlike an LLP where one general partner must remain liable for partnership debts. 
• Tax Benefits- LLC members may also enjoy the same flow-through tax benefits which are applicable to partners of a partnership.
• Easier to maintain- LLC's are not required to hold annual meeting and to record meeting minutes. LLC's are known for their operational ease.
• Heightened Credibility- Forming your company into an LLC can increase the credibility associated with your business.

What is an S Corporation?

An S Corporation also know as S Corp is a legal entity described by IRS.gov as "a corporation that decides to pass income, loss, deductions, and credits to their shareholders." S corporations avoid the double taxation inherent to general business corporations, in which profits and dividends are both taxed.

How do I turn my business into an S Corp? 

All corporations are started first as C Corporations. After your C Corporation is started your company must elect to become an S Corporation with the IRS by signing IRS form 2553. 

Some things you need to know if you're starting an S Corp are

1. Limit of Shareholders- S Corporations are limited to 100 shareholders 
2. Shareholder Definitions- A new law allows "members of a family" to qualify as one, and defines "members of a family" as the common ancestor, the lineal descendants of the common ancestor, and the spouses or former spouses of the lineal descendants or common ancestor  
3. Stock Restrictions- S Corporations only have one class of stock
4. IRS filing- To obtain S Corporation status, all shareholders must sign IRS form 2553 which must be filed within 75 days of starting business. 

If you want to incorporate your company don't worry, American Incorporators Ltd. provides fast and easy incorporation for you so just give us a call at 800.421.2661 or check our our website for more details.

Incorporating your business can give you and the other owners of your business a number of benefits. For the benefits of incorporating you can look HERE. Incorporating your business can be an easy task with your friends at American Incorporators Ltd. to help you. It takes completing these simple tasks and we’ll be there to help you along the way

1)      To be a legal entity you must register your business name with the Secretary of State. If you have already thought of your name check it HERE to make sure it is available in your state.  If you do not already have a name, that’s okay think of a creative name for your business that will be attractive for customers.

2)      Decide what kind of entity you would like to incorporate. LLC, S Corp, C Corp and what state you would like to incorporate in. 

3)      Call Us- 800-421-2661

4)      Depending on your states regulations we could get your documentation and your business up and running in just a few days. 

If you want to download our "How To Incorporate a Business With American Incorporators Ltd" Guide click HERE

There are 5 Different types of entities than can own a business.

• C Corporation
• S Corporation 
• LLCs & LLPs 
• General Partnerships
• Sole Proprietorships

1. Limit the Liability and Protect the Assets of Owners
2. Increase Tax Savings 
3. Raise Capital 
4. Perpetual Existence
5. Simple Estate and Family Planning