The corporation is rigid and subjected to many oversights. The process of a corporation filing is also unquestionably complex. Therefore, it is vital to ensure you are not missing any critical information. Rushing through corporation filing to launch your business faster can affect your future operational success.

Hence, it is necessary to have a deeper understanding and vast knowledge before structuring your business legally as a corporation.

A corporation exists beyond the founder, and shares are transferred easily from one owner to another. Incorporating your business separates it from your assets. But you may be wondering whether a corporation is necessary for your small business.

Incorporation helps to limit your liability for business obligations. It is also a good option if you want investors to invest in your business. Read on as global Multi Services explains things to know before incorporating your business.

The Right Business Structure

Before incorporating your business, you need to know if structuring your business is the best way to reach your business goal.

There are four major business structures, and you need to evaluate the pros and cons of each. A corporation is only attractive if you want to build a rigid managerial hierarchy and anticipate a rapid expansion of your business.

It is also beneficial for asset protection and the transfer of shares. However, corporations are subject to strict reporting and compliance regulations. The shareholders are responsible for making major business decisions.

The other business structures available are sole proprietorships and partnerships. Their management structure is flexible and taxed as personal income to their owners. Also, they do not have reporting or compliance requirements.

Finally, you can also structure your business as a limited liability company. LLC allows you to benefit from personal liability protection. That means member assets are protected if the business loses money, is issued, or is subject to government fines.

Where You Want To Incorporate Your Business

Your business location is one of the crucial decisions after choosing a corporation. An attorney will give you a thorough breakdown of the corporation filing in each state.

The attorney can also help you get permission to conduct business in multiple states through a foreign qualification process or a multi state registration process.

However, be careful when choosing your state of incorporation. The state’s laws will impact your corporate tax rate, reporting, compliance, baselines, and many more.

Choosing The Corporate Officers

Corporations are rigid and complex compared to sole proprietorships, partnerships, and limited liability companies. The shareholders appoint corporate officers to run the daily affairs of the business.

Therefore, you will need to list the names of the corporate officers with their functions in your articles of incorporation. You will also list the number of shares of stocks your corporation can issue. Your state of incorporation determines the minimum number of directors. You’ll also need to list

A corporation is a business entity authorized by the state to act as a single entity. Corporations are best for entrepreneurs who want a formal business structure with the legal right to enter contracts, protect shareholders’ assets, sue and be sued, loan money, and pay taxes. But it involves many processes. These include Corporation filing, designation of registered agent, and many more.

The legal statute of a corporation varies from one state to another. Therefore, you need to seek the guidance of an attorney before your corporation filing. Read on as Global Multi Services takes us through the types of corporations.

What is Corporation Filing?

Corporation filing is a set of legal documents that provides name, address, business purpose, representative information, and other important information about the corporation. It is mandatory for every corporation and filed by the shareholders.

How to Start A Corporation

Starting a corporation requires filing an article of incorporation by shareholders with common stock in the corporation who are also pursuing the same goal. The board of directors governs the corporation and is elected by the shareholders. The number of shares each shareholder owns determines its percentage in the company.

Types of Corporations

There are different types of corporations which includes the following:

C-Corporation

C-corporation is a business entity with unlimited numbers of shareholders. They raise capital by selling shares, making it a common entity for many large companies. These business entities are subjected to a double taxation situation. That means the shareholders are taxed individually and on the dividends received from the company.

C-corporations protect the shareholder’s liability from business debt and litigation. The shares in the corporation can easily be bought and sold. The percentage of ownership is also divided based on shares owned by the shareholder.

Closed-Corporation

A closed corporation is a private or family company where shareholders are small and closely associated with the business. The shareholder asset is protected, and the company also experiences greater flexibility in operations.

S-Corporation

S-corporation is a business entity with limited shareholders and avoids double taxation. The corporation’s income is passed directly to the shareholders without paying federal corporate taxes if it meets the requirements of a specific internal revenue code.

That means the shareholders are taxed: instead of taxing the company as a separate entity. To qualify as an S corporation, the corporation must meet specific requirements. These includes not having more than a hundred shareholders, must be a citizen, not having partnerships, and many more.

Non-Profit Corporation

A non-profit corporation is a business entity established for religious, educational, charitable, or political purposes. They often provide public benefit rather than personal profit and do not pay federal and state taxes.

The members of this corporation cannot distribute profits but are allowed to pay wages or compensation for service rendered. Requirements for establishing a non-profit corporation vary from one state to another.

B-Corporation

B-corporation is structured to benefit society by meeting the highest standards in legal accountability, public transparency, social and environmental performance. The corporation redefines success in business by providing a more sustainable and inclusive economy. These reduce poverty, inequality while promoting a healthier environment.

One of the first decisions you make when forming a trucking company is the Corporation Filing your business will take. Will it be a Limited Liability Company, Sole Proprietorship, or Corporation? The answer depends on your preferences, goal, and future growth of your business. Most business owners form corporations because it protects them against financial and legal liabilities. This is because a corporation helps separate owner’s assets and bank accounts from business assets. Corporations Filing provides businesses with many advantages, but it also has its disadvantages. These include expensive corporation filing fees, loss of business control, double taxation if it is a C corporation, and many more. Carefully analyzing the needs of your business will help you decide whether to incorporate it or not. Read on as Global Multi Services discuss the cons of corporation filing in greater detail below.

Extensive Formalities and structure

Corporations are required by law to have a set of standard formalities that governs them. These include keeping accurate records, having a board of directors, holding regular meetings, operate as a separate entity, following the company’s bylaws, and many more. These ensure the company is legally distinct, maintains its status, and runs smoothly.

Expensive Corporation Filing

One of the downsides that come with corporation filing is the expenses. They are one of the most expensive business structures to set up. Corporations are a complex structure, and many filing fees are associated with their formation. For example, in some states, Non-profits corporations must file a separate state tax exemption status to the Internal Revenue Services and pay a registration fee every year. Many states also impose an ongoing fee and an annual report fee on corporations. These fees can be costly for many small businesses.

Corporation Filing Lengthy Application Process

The application process for corporation filing is very lengthy due to extensive paperwork. Filing your article of incorporation with the Secretary of State is easy, but the overall incorporation process is often time-consuming. To establish a corporation, you need to keep details of the organization and its ownership. These include the corporation’s bylaws, board of directors, financial transactions, officers, corporation articles, meetings, shareholders, and other activities. Each state also has its corporate filing requirements and record keeping guidelines for incorporated businesses. Therefore, you need to do research on your state regulations or seek the advice of an attorney to remain in good standing with the state and law.

Double Taxation

Corporations like C-corporation face double taxation. This means the business is taxed as a separate entity and the shareholders are also taxed based on the percentage of profit they earned. The only way to avoid double taxation is by operating as a limited liability company or S-corporation.

Distinct Legal Entity

Corporation Filing takes away the control you have over your business. It is a distinct legal entity governed by a board of directors. Corporations also have federal and state rules stating who can serve on a board of directors. The board of directors can vote in other board members and vote out members. They can also take over the business leaving the founder with no say.