If you operated your business as a sole proprietorship or general partnership, your EIN was your Social Security Number. When you incorporate or form a limited liability company (LLC), you must apply to receive a new number from the IRS.

In order to obtain an EIN, Form SS-4 must be completed and filed with the IRS. Certain states also require corporations and LLCs to obtain a state tax identification number. To learn if your state requires this, you should contact your state taxation authority.

BizFilings has two EIN-related offerings. With the SS-4 Form Preparation Service, BizFilings will prepare this form on behalf of your business, and then send it to you for you to submit to the IRS. This service is included in our Standard and Complete Formation Service, or can be added to our Basic Formation service for $25.

With the EIN Obtainment Service, BizFilings will prepare form SS-4, submit it to the IRS, and obtain the number on behalf of your business. This service is included with our Complete Formation Service and can be added to our Standard Formation Service for $45, or selected with our Basic Formation Service for $70.

To take advantage of BizFilings’ formation services, click here to access our order form.

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The primary advantage of incorporating a business is the limited liability the corporate entity affords its shareholders. Typically, shareholders are not personally liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder to pay debts owed by the corporation. In a partnership or sole proprietorship the owner’s personal assets may be used to pay debts of the business.

Other advantages of incorporating a business include:

* Incorporating may establish credibility for a new business with potential customers, employees, vendors, and partners.
* The ownership of a corporation is easily transferable through the sale of stock.
* Corporations have unlimited life extending beyond the illness or death of owners.
* Certain expenses, such as insurance, travel, and qualified retirement plans are typically tax-deductible.
* Additional capital can be easily raised through the sale of stock (shares) in a corporation.

The main disadvantage to forming a C corporation is often considered to be the potential for double taxation. C corporations are considered separately taxable entities by the Internal Revenue Service (IRS), and taxes must be paid on the profits of the corporation. If a corporation then distributes its profits to shareholders in the form of dividends, the dividend income is also taxed as regular income to the shareholders. In this case, the corporation’s profits are taxed twice, first as income to the corporation and second as dividend income to the shareholder, creating the “double-tax.”

However, not all income a shareholder receives from a C corporation is subject to the double tax. For example, if the shareholder is also an employee of the corporation, that shareholder will most likely receive a salary payment from the corporation. As long as the salary paid to the shareholder is considered by the IRS to be reasonable (or similar to the market salary rates for that position), it is treated as a business expense and is deductible to the corporation. This helps reduce the amount of taxable income the corporation has.

In order to eliminate the possibility of double taxation, C corporations can elect to be taxed as an S corporation with the IRS. With S corporations, the profits and losses of the corporation are reported on the individual tax returns of the shareholders, and any necessary tax is paid at the individual level. This taxation method is called “pass-through” taxation, since the profit or loss of the corporation is passed through to the shareholders.

Other aspects of C corporations that can be considered disadvantages include:

* Corporations are more expensive to form than sole proprietorships and partnerships.
* There are more corporate formalities, such as annual paperwork, and more state and federal rules and regulations, than with sole proprietorships and general partnerships.

When evaluating whether the corporate structure is right for your particular business, it is advisable to first determine the goals of your business, and then to assess the advantages and potential disadvantages of the different business structures in relation to those goals. You may also wish to seek the advice of an attorney or accountant.

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Certain formalities are to be complied with for forming a corporation. Before opting for cheap incorporation online, it will be advisable to understand what you are getting into by incorporating your business. If you have decided to incorporate out of state in one of those tax haven states, have you thought about what will be needed to operate the business in your state? Or, is the corporation the right business structure for you and why not an LLC? Consulting a lawyer for your incorporation will provide you with the right answers and advises. But that does not necessarily mean that you have to consult a lawyer for forming a corporation. You may opt for online cheap incorporation if you have the confidence that all angles regarding the incorporation have been covered.

Cheap incorporation or costly, you still have to pay the fees for filing your articles and other permits and licenses. You need a resident agent with a local address if you are incorporating out of state and you have to file annual corporate returns, pay corporation tax every year till you decide on dissolution. All this cost money and before starting on incorporation it will do good to think about all this.

Online cheap incorporations does not mean that they are cheap as in substandard. If you have done your homework and comply with the incorporation formalities correctly, online incorporations will not only save you money but also time. Online incorporation if properly executed will provide faster results due to the ease of operations for the state agency handling incorporations and other business formalities. Most states nowadays encourage online activities for this reason and some states insist on filing your papers online.

Now that you understand as to why incorporate, let us understand how to incorporate yourself. Business entities are created and governed by state statutes. By incorporating your business you will be creating a separate legal entity under the eyes of the state law. The separate entity has to assume obligations and duties as that of a normal person in business. To ensure that a corporation is not used as façade by the owners to indulge in nefarious activities because of the limited liability status it bestows on the business owners, states stipulate lengthy formalities and procedures in a corporation’s formation and operations. You have to comply with all the statutory and legal obligations for forming and operating a corporation in a state. Generally business registrations are managed by the Secretary of State’s or a Corporation Commissioner’s offices. Check with these offices to understand the correct formalities to incorporate yourself.

The first requirement for small business incorporation in almost all states is to file an Articles of Incorporation with the agency handling incorporations and pay the required filing fees. The Articles should contain all the basic information about the intended corporation and its proposed business. You will need a registered agent in the state to handle all the paperwork and formalities on behalf of the corporation. Usually the Articles of Incorporation is a standard pre-printed form with blanks for the required information. You as the incorporator have to fill in the blanks, sign the form and submit it to the corporate filing office. Further to the filing, you require to appoint the directors and office bearers of the corporation propose and adopt bylaws in the first meeting held for the purpose. Bylaws are the basic tenets under which the corporation and its officers and directors will operate the corporations business. Each and every activity or decision other than the routine business operations of the corporation has to be passed with resolution in a board meeting and recorded in the minute book. Refer to the states corporation code to know all the formalities involved in running a corporation.

The main disadvantage of the above mentioned business structures are that the business owners personal liability is unlimited. The partner or sole proprietor is personally responsible for all business activities and liable to pay all business debts or obligations regardless of their interest in the business with an exception of the limited partners. To overcome this disadvantage you may adopt a structure that limits the personal liability of the business owners in business obligations. Forming a Limited Liability Partnership, Corporation or a Limited Liability Company will serve the purpose. In these forms of legal business structures, the business owner’s liability is limited to their capital contribution.  Many statutory and legal formalities are involved in forming and operating these business structures.

Why incorporate is because corporations are suitable for businesses which need considerable capital infusion and time to grow and prosper. Corporations have a separate legal identity from that of its owners. Business continuity is not affected by the disability or death of a business owner in a corporation. There are two types of corporations, a C Crop and an S Corp. Though the basic structures of the both entities are same, S Corporation advantage is that it has a pass through taxation. The shareholders can report their share of profits in their personal tax returns and pay tax there.  The C Corporation profits are subject to corporate taxation and when the profits are distributed as dividends to share holders, they in turn pay taxes on these profits again. To start a corporation, you have to understand the basics of incorporation. Business entities are formed under state rules and regulations. To understand how to form a corporation, you consult the state agency dealing with incorporations in your state.

Corporations have become the most common legal business structure for budding entrepreneurs with a vision to grow. Small business incorporation is now easy with states encouraging small business operators. States are actively soliciting entrepreneurs to start business in their territory by simplifying formation procedures and formalities. Some states even provide tax holidays or subsidies for niche businesses. To know how to incorporate yourself, all you need to do is get in touch with the agency handling business registrations in your state. Usually this is handled by the Secretary of the state’s or Corporations Commissioners offices.

There are a few basic rules on how to form a corporation. First step is to find a name for you to incorporate under. Care is needed in doing this. You cannot use a name which is identical or closely similar to that of any existing business. You will have to check with the agency handling corporations in your state and the corporations register to make sure that the name chosen is available for use. Then you file an Articles of Incorporation paying the due fees. The Article is usually a pre-printed form which should be filled in and signed by the incorporator or the promoter of the business. It will contain the basic information about the corporation and its functions. A bylaw of the corporation to set the rules and policies for the operation of business is a necessity.  It will act as a guide to the directors and office holders of the corporation in executing their duties and handling their responsibilities.

Forming a corporation involves legal and statutory formalities also.  By definition a corporate is a legal entity as that of person. It has to abide by the rules of the society and the constitution like any ordinary citizen. The promoters of a corporation create the legal entity by fulfilling legal requirements of the state in which the entity is incorporated. The corporation, after becoming legal entity functions through its board of directors and operates through its office bearers. The Articles of Incorporation states the purpose for which the entity was created and its organizational structure.

Corporations are incorporated under state law and regulations. Rules and regulations that govern corporations may differ in each state. If you intend to incorporate a company in any of the states, corporate kits will come in quite handy. These corporate kits contain all that is necessary to be filed or put in place by a new corporation. Make sure that you order state specific corporate kits as not to miss out on any of the rules or regulations of that state.

As opposed to forming a corporation, forming llc is less cumbersome. Limited Liability Company is comparatively easy to form and manage. It has the advantage of the limited personal liability of its owners as that of a corporation but does not involve too many formalities like recording minutes or mandatory board meetings etc. Another advantage is that the LLC can elect to be taxed according to it convenience. By default, a single member LLC is treated as a Sole Proprietorship and multi member LLC as a partnership for taxation purposes. However, the owners have the choice to be taxed as a C corporation or even an S Corporation if the LLC meets certain criteria.

A single member Limited Liability company when elected to be taxed as a “disregarded entity” (which means the LLC has no separated existence from that of LLC owner for tax purposes) profit from active trade or business is subject to self employment tax. The single member should report the business income in a schedule C tax form and pay the self employment tax based on Schedule SE Tax form. Where the LLC is not engaged in active trade or business and only a passive source of income such as income from investments or deposits, no self employment tax is payable. When a multiple member LLC engaged in active trade or business elects to be taxed as a partnership, the partners pay self employment tax on their share of profits and report the business income through a 1065 form. In an LLC elected to be taxed as a corporation, no self employment taxes are applicable on amounts paid as wages to the members but such payments will be subject to payroll taxes.

Where the LLC is treated as a disregarded entity or a partnership for tax purposes, no payroll taxes are applicable to profits distributed to the members and where no employees are engaged in the business. In LLC’s treated a C Corporation for tax purposes, any amount paid to members other than profits are subject to payroll taxes. For finer details on LLC taxation, consulting a corporate law firm will be prudent. They will be able to guide you on the most beneficial way to be taxed based on your business activities and LLC operating agreement.

Stock certificates are basically of two types. You can issue a registered stock certificate or a bearer stock certificate. Registered stock certificates are issued in the name of a bona fide investors and their name and addresses are recorded in the corporation’s stockholders register. The bearer stock certificates are issued as the name implies is a bearer instrument meaning, the physical possession of the instrument awards ownership.

Forming a corporation is the first step towards issuing stock certificates.. There are formalities and procedures involved in forming a corporation. State laws determine the rules and regulations under which a business can be incorporated in that state. You have to file the necessary application forms along with the articles of incorporation and pay the due fees. The articles of incorporation are your charter under which you will operate as a business entity in the state.

Once the formalities of incorporation is over, you proceed with the rest of the formalities of a forming a corporation.  In the Articles the directors of the corporation would have been named. These directors hold a first meeting of the corporate board of directors and act on certain important tasks such as setting the corporate financial and accounting year, adopt the corporate byelaws, authorize issuance of share or stock certificates and appoint corporate office bearers. Once the stock certificates are authorized to be issued by the board of directors, the corporate officers print and issue the stock certificates to the stock holders.

Forming a corporation is best suited for large and medium business where the capital requirements are huge and highly impossible or imprudent for individuals to invest directly. As to the question Why incorporate”, by bringing in a collective of investors and their resources, professional business men manage to raise sufficient capital needed for such large business ventures. By incorporating, a separate legal entity is created and the investors are not personally responsible or liable for the entities actions or obligations. Some of these professionals prefer offshore incorporations to side step many of the restrictive regulations in states and by the federal government. Additional financial considerations like lower tax rates and tax holidays are also attractive terms to them.

Partnership being a mutual agreement between two or more owners, is easy to form and does not necessitate any legal formalities. The basic types of partnerships are general partnerships and limited partnerships. General partnerships are more common because it provides all the partners an opportunity to contribute to the business and control the business activities. The downside is that each partner is personally liable for all the business obligations and liabilities. This means that if a claim or liability arises out of the partnership business activity, each individual partner is liable to pay it in full regardless of that partner’s interest in the partnership. If one partner’s personal assets are not enough to meet that partner’s share of the liability, the other partners have to make good for it.

Limited partnerships are also used as a structure for-profit business. Such partnerships has a general partner who is responsible for the overall business operations and limited partners who invest in the business but has no particular say in the business operations. The general partner is personally liable for all the business obligations and debts. The personal liability of the limited partner is limited to a pre agreed amount. These are generally used in family business where family property needs to be protected and the general partner needs freedom to act. A family limited partnership gives flexibility to the dominant family member to operate the business and help protect the family property from business claims and liabilities.

The creation, organization and dissolution of partnerships are governed by the state laws. Partnership is a business association between two or more persons and as the state laws broadly define “business” and “persons’, specific partnership law or acts are not enacted by the State or Federal governments. For state and federal tax purposes, partnership is not a tax classification, the individual partners file the profit or loss from business along with their personal tax returns.