To protect your personal assets from business liabilities or obligations, you should adopt a legal business structure that provides personal liability protection to business owners. The common forms in use are Corporations and Limited Liability Companies. Both forms limit the personal liability of business owners to the capital contribution and all other business debts or obligations do not cross over except in certain circumstances. Forming a LLC or Corporation requires compliance of formal procedures with state government.  Corporations re structured by units of shares and shareholders subscribe to particular number of units. Corporations have a separate legal existence and are perpetual in its continuity. A Limited Liability Company is formed by one or more persons by filing an Articles of Organization in accordance with the state rules and regulation governing such formation. For forming an LLC some states insist on filing the LLC Operating Agreement along with the Articles.

In Taxation rules, the corporation is treated as a person and has to file all the necessary returns stipulated by the revenue codes. The Corporation is taxed directly on its profits. When these profits are distributed among shareholders they have to declare that as income and pay tax on it if application. There exists another type of corporation, which is not subjected to this double taxation, a S Corp. In an S Corp or LLC the profits pass through to the shareholders or members and is declared and taxes paid through personal tax returns.

The only disadvantage in a single member llc when compared to a multi member llc is that, when bankruptcy or dissolution occurs, the separate existence might become moot. Courts may rule either way based on the operational history of the company. For all other purposes the single member llc has a separate existence from that of its single member.

Setting up an llc is quite simple and straight forward. All business entities are constituted under state laws. Set up llc in accordance with the rules and regulations of your state or the state in which you wish to register your llc. Though the rules and regulations governing business entities may vary in each state, formalities and procedures for setting up an llc in most states are identical. You have to file the Articles of Organization and pay a fee for the filing. In some states an llc operating agreement is also a mandatory document and should be filed along with the articles of organization for setting up an llc. Certain states stipulate that a public notice be issued about the intent to form llc.

The Operating agreement is a crucial document in any llc, whether single or multiple member. The operating agreement should clearly state the member’s interests, rights and responsibilities, business policies and management functions. This document should clearly identify the LLC as a business entity with it’s owns rules and policies that distinguishes it from its member’s personal life. In a single member llc, having an operating agreement and operating the business in line with it is essential in establishing its separate existence.  It will give the owner chance to prove its separate identity in a court when the need arises.

If two or more persons are jointly operating a small business enterprise without potential business liabilities, a general partnership is ideal. Like that of a sole proprietorship, a general partnership is also easy to form and operate. The income from business can be reported through the partner’s tax returns. You may have to file an information return on the business activities apart from that of your tax returns.

The issue with the business structures cited above is that the business owner’s personal liability is unlimited. Any liability or debts arising from the business is the proprietors or partners responsibility and their personal property is open to appropriation to settle business debts.  The solution to this is by setting up a business structure that limits business owner’s personal liability to business obligations. Corporations and Limited Liability Companies are designed to just that.

If you are operating a small business that involves considerable business risks and has potential for future liabilities, form a llc.  As business structure formation is governed by state statutes, you will have to check with the government agency handling business registrations for setting up an llc in your state. Starting an llc is relatively simple and straight forward. You have to file an Articles of Organization with the state agency and pay filing fees. It is as simple as that. The Articles will contain all the basic information about your llc. Most states have the Articles in a standard form with instructions on how to fill the form. Another important item is an llc operating agreement. You have to prepare and adopt an operating agreement for your llc stating its organizational structure and functionalities. In some states this is a mandatory requirement for starting an llc.

Corporations and Limited Liability Companies are two options for limiting your personal liability and protecting your personal assets. Limited liability partnerships are also a business structure that can limit personal liability of business owners but is restricted to specific businesses or professions in many states. The owners of these business structures have limited personal liability in business obligations. Limited Liability Companies are often incorrectly termed limited liability corporations or LLC Corp. LLC is an unincorporated entity but shares the limited liability characteristic with a corporation. LLC has the flexibility of operations as that of a partnership or sole proprietorship without the burden of unlimited personal liability of these business forms.

LLC’s are easy to form and convenient to operate. LLC business can start with filing an Articles of Organization with the state agency that deals with business registrations and paying the filing fees. It is prudent to have an LLC operating agreement in place. The llc operating agreement will portray individual existence and provide visibility to the limited liability status of the company. The owners of the LLC (called members) have the flexibility of partners of a general partnership in the management of the business while their personal liability is limited as that of share holders in a corporation. The members of the LLC can elect to be taxed as any other business entity like a partnership or corporation according to their convenience.

In LLC vs. corporation, the standard C corporations are subject corporate income tax and when the profits are distributed to the shareholders, they in turn have to report the income in their personal tax returns and pay tax if applicable. In LLC vs S Corporation, both have pass through taxation similar to that of a partnership and the members report the income in personal tax returns. This can avoid the double taxation involved in a C corporation. However, in all business entities, employment taxes or license fees are payable, if any are applicable to them.

LLC form is best suited for small business operations which involve considerable transactions and where the chances of generating a liability or claim exist. LLC formation is relatively simple and straight forward. It does not involve too many formalities either in its formation or maintenance when compared to a corporation. The advantages of form LLC is that while it limits your personal liability, it offers great flexibility in management and control of you business.

LLC formation is not so hard that you have to engage lawyers and pay huge fees. All States provide basic information in the formalities and procedures involved in llc forms. What is not available on the State websites, you can collect from the state agency dealing with the registrations. The basic steps for forming an LLC are

• Choose an available business name in line with your states regulations. Some names or nomenclatures are prohibited as a part of an LLC name.
• Draw up the required documents such as the Articles of Organization and the Operating Agreement.
• File these documents with the appropriate state agency along with the application and pay due fees.
• Obtain all the relevant licenses and permits needed by the LLC to run a business or to employ people.

Some states require that a public notice should be issued regarding the LLC formation.

The Operating Agreement is critical in an LLC’s conduct of business. Even if it is a single owner LLC, the operating agreement provides clarity in the LLC operations and creates individuality to the structure. Where there is more than one member, the operating agreement helps in writing every operational term into black and white to avoid any ambiguity or future disputes.

Before you can go about forming a corporation in Wisconsin, you will need to choose a name for your corporation. When choosing a name for your corporations you need to ensure that they name you choose is different from other corporations registered in the state of Wisconsin. The name also has to stand out from other businesses in the state it cannot be similar. To identify your business as a corporation you will need to include the word corporation or incorporated or an abbreviation of those words in the business name, it can even be tacked on at the end.

Once you have chosen a name and performed a name search to ensure that the name isn’t being used by anybody else you will want to prepare your articles of incorporation. Once you have finished preparing the articles of incorporation you will need to file them with the Wisconsin Secretary of State. Before you file your articles of incorporation, you want to make sure that all of the required information is included, otherwise your request to form a corporation will be denied, and you will have to start the process from the beginning.

In Wisconsin, you do not have to include the information on the initial directors of the corporation, but you do need to include information on the incorporators. There has to be at least one incorporator included in the articles of incorporation. If there is more than one incorporator, all of them have to be listed in the articles of incorporation, but only one of them has to be a natural person who is at least eighteen years old. All of the other incorporators can be businesses.

The state of Wisconsin allows a corporation to be formed for any lawful business activity, as long as it follows the laws of the state, and certain industries are regulated by the state more than others are. With this in mind it is not necessary to include the purpose in the articles of incorporation, but it can be included if you deem it necessary. The number of shares that your corporation is authorized to issue must be included in the articles of incorporation. It is also good to include the par value of the share of stock or designate whether it will be no par value stock. You will also need to include any provision granting or limiting preemptive rights and the name and address of the initial registered agent. The last thing that has to be included in the articles of incorporation is a statement saying the corporation is incorporated under the laws of Wisconsin.

Once the articles of incorporation have been filed and approved, you can hold a board of directors meeting to adopt the bylaws that have been prepared for the corporation. At the first meeting, you can also determine if a corporate seal is going to be required for opening bank accounts or for issuing stock.

Something else that you want to think about when incorporating in Iowa is using a corporate seal. It is not required by the state of Iowa to have a corporate seal, but it is something that you should consider getting. Your corporate seal will come in handy if you plan to do business in foreign countries, but it is also required by some banks to open a business bank account.

To start the incorporation process in Iowa you will need to create a name for your corporation. The state of Iowa does not have any restrictions on terms that you can use in creating your corporation’s name, but you still don’t want to make your corporation’s name confusing. You want to create a name that clearly conveys to your customers what the purpose of your business is. Your corporation’s name should also be different from any other business in the state so hat your customers will not confuse you with other businesses. The only requirement that the state of Iowa has on your corporations name is that it must contain a word that identities your business as a corporation.

The next step of incorporating your business in Iowa is filling out your articles of incorporation. Most articles of incorporation will include basic information about your corporation, including director’s information, officers’ information, and stock information among other things. In the state of Iowa, you can include the directors’ information and the officers’ information in the articles of incorporation, but neither of them is required to be included in the articles of incorporation. Stock information must be included in the articles of incorporation, including classes of stock that you will be issuing, along with their value. In Iowa if you plan to increase the shares of stock that you are issuing or increase the par value of the stock you can do so without incurring any additional fees.

Once the articles of incorporation have been filled out, you will need to file them with the Secretary of State’s office. Upon filing your articles of incorporation, you will need to pay the required filing fee, which is not the same fee that must be paid when filing your annual report. After your request to incorporate has been processed, you will receive a certificate of incorporation in the mail. To keep your corporation status safe you will need to make sure that you pay your taxes on time and meet any yearly requirements that the state of Iowa has.

Income taxes in Iowa will be 6% for the first $25,000; 8% for any income from $25,000 to $100,000; 10% on income from $100,000 to $250,000, and 12% on any income above $250,000. Once a year you will also need to file your corporation’s annual report with the Secretary of State, when filing the annual report you will need to pay a $30 filing fee. Your first annual report is due between January 1 and April 1 of the year following the calendar year that your business was incorporated in Iowa.

The first step to incorporating your business within the state of Colorado is to choose a corporate name. The name that you choose for your corporation must be distinguishable from any other business that is registered in the state of Colorado, this means it cannot be the same as or similar to any registered business or reserved name. Each corporation’s name must contain a term that allows it to be easily identifiable as a corporation.

Once you have chosen and reserved your corporation’s name you will need to fill out and file the articles of incorporation. When filling out the articles of incorporation you will need to include some specific information that is required by the state of Colorado. The first thing that you will need to include is the personal information of any of the incorporators of the corporation; this includes their name and address. The incorporators must also sing the articles of incorporation before they are filed. Articles of incorporation usually include the purpose of the corporation, but Colorado does not require you to include your corporation’s purpose. Most articles of incorporation include information on the directors of the corporation, but under Colorado formation requirements, you do not need to include this information.

Stock information must be included in the articles of incorporation. In the articles of incorporation, you must include the number of shares of stock that you will be issuing and the class of stock that you will be issuing. If your corporation plans to issue more than one class of stock, you will need to include the number of shares you wish to issue for each class of stock. Cumulative voting also needs to be addressed with the stock information. If your corporation does not want to use cumulative voting during the election of directors, that must be stated in the articles of incorporation under the stock information section.

Limited liability companies use an operating agreement to dictate the rules that will govern their business. A corporation does not have an operating agreement; instead, they have the articles of incorporation and the corporation’s bylaws. The articles of incorporation can include any regulations on the powers of the corporation, shareholders, or board of directors. The bylaws are adopted by the board of directors for the corporation to follow. In most cases, the bylaws are written so that the corporation’s business and affairs are handled in a specific manner. The one thing that you need to remember is that the bylaws cannot conflict with the corporation’s articles of incorporation.

The articles of incorporation must be filed with the Secretary of State to form the corporation, when filing the articles of incorporation a filing fee must be paid. The bylaws do not have to be filed with the state, but they do have to be kept on file at your corporation’s executive office.

When doing it yourself the first thing you have to do is to choose a name for your corporation. In Alaska, your corporation’s name must contain the word corporation, company, incorporated, or an abbreviation of those words. When naming your business you must not use a name that is being used by another business in the state, or a name that another business has already reserved. The business name that you choose cannot contain the words city, borough, or village and it cannot contain any words that imply a different purpose of the business than what is stated in the articles of incorporation.

In Alaska, you will need to fill out and file your articles of incorporation with the State Department. The articles of incorporation are similar to an operating agreement for a limited liability company, but they are a bit more detailed. Your articles of incorporation will include information on the officers of your corporation, but this information is not required. The articles of incorporation will also include information about the directors, but they are not required to be included. The directors do not have any age or residence restrictions, so you can use somebody who lives in another state or somebody who lives in Alaska.

Any information pertaining to the stock that your company will be issuing needs to be included in the articles of incorporation. One of the best things about incorporating in Alaska is that an increase in the number of shares that you are issuing or their par value will not increase your initial fees, unlike other states. Once you have included all of the required information for the articles of incorporation you will need to file the articles of incorporation and pay the required filing fees.

After you have filed your articles of incorporation, you will receive a certificate of incorporation once your request has been processed. Once you have received your certificate of incorporation you can start issuing stock to investors. Most business finds that the best way to issue stock is through a stock certificate. The stock certificate allows investors to have proof of their investment, rather than just something written in their portfolio.

You will need to file annual statements for your corporation with the SEC, but you will only need to file a report with the state of Alaska every two years. The cost to file this biennial report is $100, and it must be filed by January 2 of the first filing year, if you file it after February 1 it is considered delinquent.

Each year you will also need to pay the appropriate income tax to the state of Alaska. If your corporation’s income is less than $10,000, you will need to pay 1% of your taxable income in taxes. If it is over $10,000, you will need pay up to $4,500 in taxes on your taxable income up to $90,000. If you make more than $90,000 in taxable income, you will have to pay $4,500 for the first $90,000 and then 9.4% of anything over $90,000.

Before you can begin forming a corporation in California, you will need to choose a name. When choosing the name for the corporation you will want to choose a business name that is different from other businesses in your industry, so that the two businesses cannot be confused. You also want to choose a business name that is different from any other registered business in the nation. If your chosen name is already in use, you will need to choose something else.

The next step to incorporating your business in the State of California is to fill out your articles of incorporation. The initial list of directors does not have to be included with the articles of incorporation, but they must be made available to the general public once you have formed your corporation. The registered agent must also be made available to the public after your have incorporated your business. If you choose to list the directors, they will need to sign and acknowledge the articles of incorporation.

Stock information must also be included in the articles of incorporation. If your corporation is only going to authorize the issuance of one class of stock you will need to identify the total amount of shares that are going to be authorized by your corporation. If you are issuing no par value stock, you can authorize an unlimited number of shares. You can always increase the number of shares at a later date by filing an amendment with the state. Once you have filled in all of the required information for the articles of incorporation you will need to file them with the state. To file the articles of incorporation you will need to pay a $100 filing fee. Once your request has been processed, your business will receive a certificate of incorporation.

Upon receipt of your certificate of incorporation, you will need to hold an annual corporation meeting so that you can elect your board of directors. You will also need to adopt the corporation’s bylaws that you prepared along with the articles of incorporation so that the rules for governing your business are clear. If no bylaws are adopted the state can govern how your corporation is run.

Since you are a newly formed corporation, you will an $800 franchise tax upon incorporating your company. After you have formed your corporation, you will still need to pay the $800 franchise tax each year to keep your incorporation status valid. Unlike other states, you will only need to file an annual report every other year. When you file those reports, you will need to pay a $25 annual report fee.

Obtaining a corporate seal stamp is not required, but it can help when forming a corporation. Many banks will require you to have a corporate seal stamp to open up a business bank account; you will also find it useful if you are going to be doing business in other countries.