Deciding if You Should Make a Corporation

Posted by Samantha Miller on Jul 20, 2012 11:29:00 AM

Last week, we did a brief overview of the characteristics of a Limited Liability Company. This week, we’ll outline some of the key characteristics of “Corporations” – another type of entity that may be best for your business.

A Corporation can be defined as an artificial entity created under and governed by the laws of the state of incorporation. Similar to an LLC, you must file the appropriate documents with the state in order to have your Corporation legally recognized.

90138204If the following traits sound pertinent to your business, you may want to consider forming a Corporation as opposed to an LLC…

  1. Corporations issue stock. Stock can be used to raise capital (operating funds) to run or expand your business.
  2. Corporations are owned via shares of stock.
  3. When maintaining a Corporation, you’re required to hold an annual meeting of shareholders and directors. During these meetings, you must keep written minutes, or notes.
  4. The profits of the General Corporation (which are distributed to the shareholders of the corporation as a dividend) are taxed at the corporate rate. The dividend is subject to personal income taxes.

These characteristics describe the general functionality of a Corporation, but it is best to fully research and understand your options before deciding which entity type is best for your business. While Corporations are one of the more common business entity types, there are a few other types that you may want to consider.

Along with our Answer Desk, there are many great resources for you to utilize while researching your development options. Entrepreneur Magazine provides a great overview of business structures and is a consistent resource for industry updates.

After you’ve reviewed your options, you may be ready to form your corporation online. If you’d like to receive information on doing so, or if you’re ready to incorporate, visit our Quick Quote section to get started!

What resources have you found helpful when developing your business or corporation? 

Topics: Tips & Tricks, Corporation Creation

5 Important Things to Consider During LLC Creation

Posted by Samantha Miller on Jul 13, 2012 2:26:00 PM

Over the next week, we'll focus on helping you understand the basics of company formation. Before you start your business, it's best to have the business become legally recognized by the state through incorporation or formation. Today, we'll do a quick overview of 5 important things to consider during LLC creation. 



An "LLC" or "Limited Liability Company" is a legal entity created by filing the appropriate certificate with your selected state of formation. This entity has "Limited Liability," which helps to separate your personal assets from your business liabilities. 

Here are 5 Important Things to Consider During LLC Creation: 

  1. LLCs do not issue stock. Stocks are specific to Corporations - a different type of business entity that offers different benefits.
  2. An LLC is a "pass through" tax entity. It is taxed like an "S" Corporation, where the profit or loss generated by the business is reported on the personal income tax return of the owners.
  3. LLCs are typically owned and managed by the members of the LLC. On a related note, LLCs have members and managers, not officers or directors. Officers and directors are specific to Corporations.
  4. LLCs are not required to create or maintain by-laws, but instead use an Operating Agreement. Operating agreements are set up internally within your company, and structure how you handle your business.
  5. LLcs are not required to hold annual meetings. This provides more flexibility and offers a benefit if your members are located in varying distances.

Keep in mind that these are brief points and that there is much more involved when creating an LLC. You can learn more in our Learning Center.

Corporations are another type of business entity that may work best for you. If you'd like a quick overview of the differences between Corporations and LLCs, you can download our free Fact Sheet.

These articles from also share some great points about what to consider when creating an LLC:

What have you found helpful when setting up or managing your own LLC?

If you have any questions or suggestions for blog posts, let us know!



Topics: LLC Creation, Tips & Tricks