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Forming a Corporation

important steps in forming a corporation
Although many entrepreneurs these days are structuring their businesses as LLCs because they offer limited liability protection and more flexibility in management and taxation than traditional C-corporations, there is no one-size-fits-all form for a business to take. In fact, many people file their business without doing their research. They do not understand the differences between an LLC and an LLP or a C- Corporation and an S-Corporation. They might not even know other options exist. Not knowing this could end up costing you more money than necessary.

Why Form a Corporation?

In a small corporation where most earnings are paid to the shareholders as salary, operating as a corporation may actually place you in a lower tax bracket than a partnership-like “pass through” taxation would. Also, if your long-term goals include going public, operating as a corporation from the start may decrease your expenses during the IPO process. Another great aspect of making it official is taking the time to work out a strong business plan and a sound operating agreement. Using our intelligent business strategies and legal advice, we can help you build a great foundation that could take your company from a small business to large corporation in a profitable and responsible way.

How to Choose Your Corporation Type

Not all corporations have the typical corporate structure either. Nonprofit ventures may incorporate as nonprofit corporations. S-corporations allow for “pass-through” taxation (tax to shareholders only, not to the company) for those companies that foresee remaining small and issuing only one type of stock. The decision of which form your business should take is one that requires analysis of many factors, including management, taxation, and fundraising. Consulting with a business attorney up front before choosing a business form can maximize your success down the road, and can also prevent a great deal of expense and unwanted complication.