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US INCORPORATION FAQs
Why do businesses incorporate?

Businesses incorporate primarily for protection: protection of the owners of the company from the liabilities of the business. Both corporations and limited liability companies legally separate the owners/investors of a company from their company's liabilities. Further, incorporation of either a corporation or an LLC may provide tax benefits, prestige and/or name protection, as well as possibly making it easier to set up health insurance, retirement plans and other benefits to owners and employees.
What is a Corporation?
A corporation is a legal entity that exists separately from its owners. Creation of a corporation occurs when properly completed articles of incorporation (called a charter or certificate of incorporation in some states) are filed with the proper state authority, and all fees are paid.
What is a Limited Liability Company?
The LLC is not a partnership or a corporation. It is a distinct business entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.
What is a Non-Profit company?

A nonprofit corporation is a corporation that is formed pursuant to a different law than a standard for-profit corporation. The corporation must be formed for some religious, charitable, educational, literary or scientific purpose. While a standard business corporation is designed to benefit and generate a profit for its shareholders, nonprofit do not have the profit motive. Nonprofit corporations are allowed to apply for tax-exempt status at both the federal and state level.
Which type of business entity is better?

Each entity has its advantages and disadvantages, so which entity to choose depends on what the company intends to do.
Should I incorporate in Delaware?

Whether a company should incorporate in depends on the size and intended activities of the company. A small business that will only transact business from a single location will likely want to incorporate in its own State. This way, there is only set of tax rules to worry about, no extra registered agent fees to pay, etc. A company that intends to transact business in several States, or wants to prevent others from incorporating with the same name or that are large and want to take advantage of the pro-business Delaware Court of Chancery, may prefer to incorporate in Delaware.
Should I incorporate in my own State or somewhere else?

Generally, if a company is located in a single office in a single State, it is better off simply incorporating in that State, and avoiding some of the extra complications of being incorporated elsewhere. As a company grows, it may need a more complex structure. Good legal assistance is definitely recommended at that point.
If I trademark a name, can someone still incorporate with that name?
Since trade and service marks are kept on separate databases, owning a mark does not stop someone from incorporating under that name. However, if someone does incorporate using a name that has been trademarked, then there may be a basis for legal action to compel an infringing company to change its name.
How long does it take?
The length of time to incorporate, and afterward to receive your corporate package, depends on the State and the level of service requested. Many States do not provide for expedited service, so there is no way of honestly knowing in those States how long it will take to process.
How do I get a tax ID number?

Federal Employer tax identification numbers are obtained by filing a form SS-4 with the Internal Revenue Service center for your district. We can obtain a number on your behalf for an additional fee.
What is an S Corporation? What is a C Corporation?
All corporations are "born" as C corporations, and can only become an S corporation by filing a form 2553 Election to S Corporation Status with the Internal Revenue Service.
In short, C Corporations file corporate returns and are taxable on their worldwide income without regard to their shareholders. When profits after taxes are distributed to the shareholders, the shareholders are subject to income tax on the dividends received.
An S Corporation does not pay taxes itself: profits (or losses) are passed on to the shareholders directly; the shareholders then add profits or subtract losses on their personal income tax returns.
FAQs – FOR INTERNATIONAL USE
How much does it cost to set up an LLC in New York?

The State filing fee is $225, plus an additional $50 to file two affidavits of publication. Our fee for preparation and filing of the articles of formation is $100.00, and our fee to file the two affidavits of publication is $25 each; the outfit with seal, binder and slipease, sample operating agreement, tax registration forms, unit certificates and other features, is $60.00. We can prepare the operating agreement, using client-supplied information, for $75.00. Related services, such as certified copies, legalization by notary, authentication by apostille or consulate and good-standing certificates arc also available. Shipping costs are additional.
What documents are required to form an LLC?

The company is formed by filing the Articles of Formation with the Secretary of State; after publication (see below) two affidavits of publication are filed. The articles of formation are generally less than one page.
What documents are received from the government to confirm filing?

The Secretary of State will issue a filing receipt confirming the filing, the name, county and mailing address of the company, and the fees paid. If a certified copy of the articles or a certificate of good-standing is required for your purposes, these must be ordered in addition to basic filing.
How long does it take to form a company?

It usually takes one to two days from the time of order for the Secretary of State to file the document and issue a filing receipt.
What other requirements are there to be in compliance?

Within 120 days after the company is filed, notice of formation must be published in two newspapers in the same county as the office of the company, for six consecutive weeks. The newspapers must provide the filer with an affidavit of publication, which is filed with the Secretary of State.
What is required to be in the name?

The company must contain the words "Limited Liability Company" or the initials (L.L.C. or LLC).
What is forbidden in the name?

Among others, the company cannot contain these words (or their abbreviations or derivatives) under any circumstances: "corporation," "incorporated," "State Police, " "board of trade," "chamber of commerce," or "partnership." The complete list of forbidden words is contained in LLCL Section 204.
Are there other restricted words?

The following are allowed only with permission of the Banking Commission or Superintendent of Insurance: acceptance, guaranty, annuity, indemnity, assurance, insurance, investment, bank, benefit, loan, bond, mortgage, casualty, savings, surety, endowment, title, fidelity, trust, finance, underwriter.
The use of the words "doctor" or "lawyer" is allowed if used in a context that doesn't imply the provision of the respective professional services. The word "exchange" must be approved by the office of the Attorney General of New York. Other words implying a not-for-profit company are also forbidden or restricted at the discretion of the reviewers at the Department of State.
What information is publicly disclosed?

The articles of formation and notice of formation are the only public information on the company. The minimum information disclosed thereby is the company's name, county of office, method of management (by its members, or by managers) and the mailing address of the company. There is no maximum for disclosure: the organizers or members may choose to put all the capital contributions, rules and regulations, names of members and managers, or just about any other details, into the articles of formation.
When can the company start conducting business?

The company can start conducting business as soon as the articles of formation have been filed by the Secretary of State. Failure to file an affidavit of publication only prevents the company from using the Courts of the State of New York; it does not affect the validity of any contracts or other agreements made by the company.
What do I designate as the County in the State if I don't have a presence there?

If there is no presence within the State, any County can be designate. Because of the difference in publication costs, and to avoid possible local taxation by the City of New York we usually designate Albany as the County of the office.
Is a registered office/registered agent required?

No. The Secretary of State acts as the statutory officer to accept service of process within the State of New York, and State law no longer requires the use of a registered agent or registered office. However, a registered agent can be designated if the company wants one. However, the company must provide a post office address to which the Secretary of State shall mail a copy of any process served against the company. Because this is a post office address, not a residence address, it can be a post office box, or care of another company; it can also be in another state or even another country.
Is a company seal mandatory?

No. The law only states that the company is entitled to use a seal if it so wishes.
Who can be a member of an LLC?

A member can be a natural person (without regard to residency, citizenship or nationality), or legal persons of any type or nationality, including trusts, partnerships, associations, corporations or other LLCs.
What is the minimum and maximum number of members?

At least one member is required at all times from the moment of formation to dissolution. There is no maximum number of members.
Who can be a manager of an LLC?

A Manager can be a natural or legal person, including trusts, partnerships, associations, corporations, or other LLCs. There are no nationality, residency or citizenship requirements.
Are managers required?

No. The company can be managed by its members, or a class of members, if it so chooses.
Do the managers have to be members?

No.
Can the managers issue a power of attorney?

Yes.
What is the minimum capital?

There is no minimum capital required. In the operating agreement (or the articles of formation, if you want to disclose the information publicly) the initial contributions of the members are listed. The initial capital can be in the form of cash, services rendered or real or personal property.
How is an LLC taxed? Does it pay taxes?

An LLC has the option to be taxed (a) directly as a corporation or (b) depending on the number of members, a partnership or a sole proprietorship. If it elects under state and federal law to be taxed as a corporation, then all its worldwide income is subject to taxation at the entity level, and any distributions to the members are taxable as dividends. Therefore, most LLCs choose plan (b) to take advantage of "flow-through" taxation, in which the LLC records its profits and losses and allocates them to the members according to the operating agreement. If the company has elected to be taxed as a sole proprietorship, then there are no annual taxes or fees payable to the State of New York. Further, if the company elects with the state and federal governments to be taxed as a partnership, and if there is no US-resident members and no US-source income, then there is no taxes or fees to pay, nor returns to file with New York or the federal government.
What are the annual requirements to stay in good standing?

An LLC that elects to be taxed as a partnership and has New York members must file state and federal partnership returns, and pay an annual fee of $50 per member, with a $325 minimum. An LLC with US members but no New York members must file a New York partnership but pays no annual fee. A single member LLC that elects to be treated as a sole proprietorship, and an LLC with no New York or US-resident members, and no New York source or US source income, pays no annual fee and files no returns.
What kinds of records does an LLC have to keep?

The LLC must maintain the following records:
(1) If an LLC is managed by managers, it must keep a current list of the full name and mailing address of each manager, in alphabetical order
(2) A current list (in alphabetical order) of the names and mailing addresses of each member, along with the capital contributions and shares of profits and losses of each member - or information from which such share can be readily derived
(3) A copy of the articles of organization together with any amendments
(4) A copy of the LLC's federal, state and local income tax or information returns and reports, if any, for the three most recent fiscal years
Are there any auditing requirements?

No, unless the company is listed on a public stock exchange.
Send your questions and comments to us by email at info@incbert.com or contact us by phone - Toll-free in USA and Canada: 800-841-3958 (Se Habla Español).
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