Making the choice to create a business entity is an important one. It can result in tax saving deductions, liability protection and a level of prestige that shows you are serious about your business. The benefits provided by forming a business entity are so encompassing, it is hard to understand why anyone going into business or in business would not incorporate. The Goodman Law Firm has incorporated hundreds of businesses throughout the United States and is prepared to meet your needs. Incorporations are done on a flat fee basis, so you know the total costs going into your new venture.

Whether you are the sole owner or have another person in business with you, it is best to consult a seasoned lawyer to determine which form of business organization will be best for you. Your choices and the benefits of each form are summarized here:

 · Sole Proprietorship: A sole proprietorship is owned by one person and requires no state filing. However, that owner will have unlimited liability for all debts of the business. The income or loss from the business will be reported on that person's personal income tax return. Although proprietorship avoids the expense of forming a partnership or corporation, many start up businesses this way because they are unfamiliar with the protections of other forms of organizations.

 · General Partnership: In a general partnership, each of the two or more partners will have unlimited liability for the debts of the business. The income and expense is reported on a separate return for tax purposes, but each partner then reports his or her pro-rata share of the profit or loss from the business as one line on his personal tax return.

 · Limited Partnership: With a limited partnership, each of the general partners has unlimited liability for the debts of the partnership, but the limited partner's exposure to the debts of the partnership is limited to the contribution each has made to the partnership. With certain minor exceptions, the reporting for tax purposes is the same as for a general partnership.

 · Corporation: A C Corporation is a powerful business toll when established and used correctly. It can provide the liability protection that all small business owners should be taking advantage of. It creates a separate legal entity that is regulated by State law and can be formed in any State in the United States. More importantly, the owners or shareholders of a Corporation cannot be held personally liable for the actions and debts of the Corporation except in the case of overt fraud. If the Corporation is properly established and maintained, the individual shareholder is not personally liable for the business' losses which result in creditors being limited to recovery from the Corporations assets. The Corporation files its own tax return and pays taxes on its income. If the Corporation distributes some of its earnings in the form of dividends, the shareholder recipients must pay taxes on those dividends even though the Corporation has paid taxes on its earnings. This is a double taxation. A Corporation has some tax benefits such as deductibility of health insurance premiums, wages, benefits, etc.

  · "S" Corporation: A corporation that has made an election to be an "S" Corporation for federal income tax purposes is treated as a partnership for tax purposes, although it is treated as a regular corporation for other purposes.

 · Limited Liability Company: A Limited Liability Company (LLC) is a hybrid between a Corporation and a Partnership. An LLC provides the liability protection of a Corporation with the pass-through taxation of a Partnership. Limited Liability Companies also provide flexibility in management. They further protect the owners from personal liability. While LLC's don't provide many of the same fringe benefits as a Corporation, the flexibility and simplicity of ownership make it the ideal tool for a small company looking for liability protection. In addition, LLC's have far fewer restrictions on membership than an S-Corporation has on shareholders. LLC's also allow members to participate in management of the LLC without losing their protection from liability, whereas a limited partner in a limited partnership does not have this benefit. Corporations can even own and manage an LLC which provides a double layer of protection. This allows greater flexibility than an S-Corporation which places restrictions on the number of shareholders and who can be a shareholder.

Obviously there are variations in these rules, and you should consult with your attorney and/or accountant in each specific case to determine what form of organization best fits your needs. [Back to the top]

Asset Protection and Anonymity:

Some States provide additional asset protection to the business owner in the form of Anonymity. This means that the owner's names are not publicly revealed on any document. These States also take a strong stance on protecting the rights of its business owners, by passing some of the most aggressive asset protection and privacy legislation in the country. These States include Nevada, Delaware and Wyoming to name a few. Each of these States have the following minimum benefits:

 · Stockholders, directors and officers need not live or hold meetings in that State, or even be U.S. Citizens.
 · The Directors and Officers may be nominees with no ownership in the Company.
 · Corporations may purchase, hold, sell or transfer shares of their own stock.
 · One person can hold all Officer and Director positions in a corporation and that person need not be an
   owner.
 · There are no cash restrictions for the issuance of stock. Property or services, at the complete discretion
   of the Board of Directors, may be used as investment capital.
 · Relocation is not necessary. Officers and Directors of a corporation can live anywhere in the world. Your    Directors and Shareholders can hold meetings anywhere. Your corporation can also be formed easily
   by mail, fax or phone so you can incorporate with out ever seeing the State.
 · There are no additional State Corporate or Personal Income Taxes, Franchise Taxes, Inheritance or
   Gift Taxes, Admissions Taxes or Unitary Taxes.

Corporations and LLC's are powerful tools that businesses of all sizes can use to their advantage to reduce risk, minimize taxes and secure privacy. Selecting an Attorney who can show you how to benefit from these advantages can save you thousands of dollars every year. The Goodman Law Firm can lead you to these advantages as they have lead hundreds of others. [Back to the top]