Corporate and Business Law > FAQ about Incorporation

Why should I Incorporate?

Incorporation can limit the personal liability of its shareholders, except the liability for criminal and negligent acts on the part of the company's officers, directors and shareholders. Other benefits of incorporation include greater tax deductions for health insurance and medical expenses, lower payments for social security tax and Medicare tax, and greater opportunity to raise capital for the business through the issuance of stock.

How can I form a corporation or LLC?

Reserve the proposed corporate name, prepare a Certificate of Incorporation, and pay state filing fees to appropriate state agencies.

What are Articles of Incorporation?

A Corporation's "Articles of Incorporation" declare the desire of an individual or group to become a corporation. It includes information about the corporation that is required by the laws of the state. Once it is filed, the corporation comes into existence under state law.

What is a Certificate of Incorporation?

The certificate of incorporation is issued by some states as evidence that your corporation is a valid corporation and has met state incorporation requirements.

Who is an Incorporator?

The incorporator is the person that files the articles of incorporation.

What are Corporate Bylaws?

Bylaws are a separate set of rules governing how a corporation is run. Bylaws are adopted by the shareholders and can later be changed by a vote of the shareholders or the directors.

In which State should I incorporate?

You should incorporate in the State where your office is physically located. States may require corporations that incorporate in other states to request permission to do in-state business.

What is an Assumed Name?

An assumed name or fictitious name, is a feature of some state corporation laws that allows a corporation to operate under more than one name. Individuals and unincorporated entities that conduct business using an assumed name must file an assumed name certificate with the county clerk in each county in which business premises are maintained. Corporations, limited liability companies or limited partnerships that conduct business using an assumed name must file assumed name certificates in the county or counties where the registered office and the principal office are located, and also file with the secretary of state.

What is a Registered Agent?

A registered agent is a person designated to receive legal notices and other official documents delivered to the corporation. All corporations must have a registered agent having a physical address. The registered agent will forward these documents to the corporation at its principal office address.

What Is a C Corporation?

The IRS classifies corporations according to how they want to be taxed. "C" corporation is a general corporation that may have unlimited number of stockholders. C corporations have their own tax identification number and pay their own taxes.

What Is an S Corporation?

A Subchapter S Corporation is a general corporation that has elected a special tax status with the IRS after the corporation has been formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partners. S Corporations avoid "double taxation" because all income or loss is reported only once on the personal tax returns of the stockholders. To get S Corporation status, all stockholders of the corporation must be citizens or permanent residents of the United States. The maximum number of stockholders for an S Corporation is 75. A financial institution that is a bank, an insurance company taxed under Subchapter L, a Domestic International Sales Corporation (DISC) and certain affiliated groups of corporations are not eligible for S Corporation Status.