Corporations, LLCs and DBAs
How long does incorporation take?
That varies from state to state. It often depends on the workload and staffing levels at your state of incorporation. Expedited service is available in some cases, but various states charge additional fees for this (One Click Advisor does not charge extra fees to process your order faster, but your state may do so). Some are approved in two to five business days, others take seven to ten weeks. Please plan accordingly.
How do I incorporate my business?
Articles of Incorporation are filed with your state and required fees are paid. One Click Advisor handles this step for you.
Once the articles of incorporation are filed and approved, your corporation holds an organizational meeting to adopt resolutions and take acts which are approved and recorded. Adoption of bylaws, election of officers, fixation of number of shares of stock, distribution of shares of stock are some formalities involved with corporations.
What information is needed to complete my incorporation or LLC?
- Business type (S or C corporation or LLC)
- State of incorporation
- First, second, and third name choices for your company
- Shipping contact information
- Name, address, phone number, and e-mail address for the pint of contact for your order
- Legal address of your company
- For corporations, number of authorized shares and par value per share
- For LLCs, names and addresses of members/managers
- For corporations, names and addresses of directors and officers
- For LLCs, whether your company is member or manager managed.
What is a registered agent, and am I required to have one?
A registered agent acts on a company’s behalf in receiving legal documents such as Service of Process (lawsuits, subpoenas, liens, etc.), annual reports, tax correspondence, or other mailings from regulatory agencies. In some jurisdictions, a registered agent may be referred to as a registered agent or statutory agent.
Nearly all states require that a corporation, LLC, limited partnership, or any other corporate entity appoint and maintain a registered agent with the Secretary of State (or equivalent agency). The registered agent is a matter of public record and is listed with the applicable state agency. You can choose to serve as your own registered agent, but that is not always possible. For example, Delaware requires that corporations and LLCs established in Delaware must have registered agents who are Delaware residents. Therefore, if registering a Delaware corporation and you are not a resident, you must appoint a resident of Delaware to be your registered agent.
A registered agent must maintain a physical presence (street address) within the state and be available during all business hours so that consumers may properly serve claims upon a company. A post office box (PO Box) does not constitute a physical presence by statutory requirements. Additionally, a PO Box will not suffice to establish bank accounts.
Since process is considered served once the registered agent receives it, it is important to have a reliable registered agent.
One Click Advisor offers nationwide registered agent services to customers in all 50 states, including the District of Columbia, as well as some international jurisdictions, through an affiliate agreement with a trusted, reputable registered agent service provider. That provider is Registered Agent Solutions, Inc.
What is a Taxpayer Identification Number (TIN) or Employer Identification Number (EIN)?
They are the same. An EIN is a nine-digit number issued by the Internal Revenue Service to all business entities. It acts as a unique identifier for a business entity. Just like a Social Security number, it identifies taxpayers that are required to file returns, in this case, a business taxpayer. It is a requirement to set up bank accounts or to obtain credit, and it is also required if a business has employees. Triumph Business Services will obtain a TIN or EIN on your behalf as part of your incorporation or LLC.
Is my TIN or EIN effective for my state also?
Many states require that you register for a State Tax ID number, which is in addition to your federal TIN or EIN. For these states, you will need a State Tax ID if you plan to hire employees or pay taxes. One Click Advisor does not obtain State Tax ID numbers as part of its standard incorporation or LLC services. We do, however, obtain your TIN or EIN on your behalf.
Are LLCs convertible to corporations and vice-versa?
No. To convert an LLC to a corporation, or a corporation to an LLC, you must dissolve the old entity and start the new one. In most cases, you should be able to keep the same name. Additionally, the new entity will need a new TIN.
If I am living outside of the U.S., can I form a corporation or LLC in the U.S.?
If you are a citizen, you can form a corporation in the U.S., as long as you have a physical address in the U.S. If you are not a citizen, you must have a U.S. citizen with a physical U.S. address listed as an officer for your corporation, or a member in the case of an LLC.
What is the minimum number of stockholders for a corporation?
One stockholder is the minimum for corporate formation. However, it is still necessary to adhere to corporate formalities such as shareholder meetings and directors in order to keep a corporate structure in place.
I would like to form a 501c(3), or nonprofit organization. What is the best way to do this?
Form a corporation in the state of your choice, and then submit an IRS application for exemption (Form 1023). IRS approval times range from 2 to 12 months. Expect follow-up questions. The best way to shorten the process is to quickly and transparently answer questions from the IRS.
For banking purposes, you can open accounts as soon as your corporation is approved. It is not necessary to wait until the IRS approves your exemption. The accounts can always be converted after the exemption is approved.
Does One Click Advisor complete LLC operating agreements?
No. If an operating agreement is needed, we recommend that you consult a qualified and experienced attorney.
How can I form an LLC or corporation under one name, but conduct business under another?
You can do this, but you will need a DBA (Doing Business As). DBAs are also known as fictitious name statements or fictitious name registrations. Additionally, any bank accounts set up will need to be titled exactly as stated on the DBA. Banks require this to protect you.
For example, John Smith is a sole proprietor operating a lawn service. A customer pays him with a check made payable to, “John Smith’s Lawn Service”. John would need a DBA certificate that says, “John Smith’s Lawn Service”. That certificate must be on file at his bank in order for John to be able to deposit that check. Banks will not allow a check made payable to a business to be deposited into a personal account.
One Click Advisor can normally obtain a DBA in one business day.
S-corporation or C-corporation? What is the difference?
The main disadvantage of a C-corporation is double taxation. In other words, the corporation’s net income is taxed once. Then, when the corporation distributes after-tax profits to shareholders, the shareholders are taxed on those distribution payments.
S-corporations have only one level of taxation. All corporate income is allocated to stockholders. However, the type and number of stockholders that an S-corporation can have is limited.
C-corporations can shield stockholders from direct tax liability and have greater tax planning flexibility.
What is the difference between an LLC and an S-corporation?
LLCs have fewer corporate formalities and greater flexibility, and they share the same tax characteristics as S-corporations. However, in many cases, S-corporation owners may be subject to fewer taxes than LLC owners. Also, an LLC may not survive its owner. Check with the Secretary of State or equivalent agency in your state for the laws regarding the lifespan of an LLC.
Will I need an attorney in order to form a corporation or LLC?
Forming a corporation or LLC does not require an attorney. You can use a professional business formation service such as One Click Advisor, or prepare and file the legal paperwork yourself.
However, we recommend consulting an attorney or accountant if your circumstances are more complex due to tax, legal, family, partnership, estate, citizenship, or other such considerations.
Does anyone have an exclusive right to use a DBA?
In general, no. In most states, a DBA does not guarantee exclusive use of a name. If a DBA application is correctly prepared and the fee paid, the state or county will file the DBA regardless of name conflict.
I want to form an LLC, but cannot decide who should be managers or members. What is a manager, and what is a member?
In an LLC, a manager is selected by members to manage the LLC. This is similar to a director of a corporation. Managers can be members too.
Members are like stockholders in a corporation. They own the LLC. Members can be individuals, corporations, other LLCs, or foreign entities.
When an LLC opens a bank account, an LLC resolution must be on file at the bank. Normally the bank will generate the resolution, and any member or manager can sign on behalf of the LLC. It is important to note that the only acceptable titles on a bank resolution are, “member”, “manager”, or “managing member”. These titles must match the titles on the LLC on file at the state.
How does the IRS classify an LLC? How will I be taxed if I own an LLC?
According to the IRS, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). An LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation. For more information, please see www.irs.gov .
Is it possible for an LLC to own a corporation, or for a corporation to own an LLC?
Yes. However, if an LLC owns a corporation, it must be the sole shareholder. If a corporation owns an LLC, the corporation must be the sole member.
Can I move my business from one state to the next?
First, decide whether or not this is advantageous for you, and it may be necessary to consult an attorney or accountant in order to make the best decision. If you decide to dissolve your corporation or LLC and file for a new one in another state, One Click Advisor can help.
Generally, you can incorporate in one state and live in another, just as you can hold a driver’s license and auto registration issued in one state, but drive your car in another state. However, you should, of course, account for taxes and other factors which vary from state to state.
As a practical matter, if you must transition your corporation from one state to the next, do so in a way that minimizes disruptions to your banking, operations, etc. One Click Advisor can assist in your planning.