Comments on: How to Choose Between an LLC, C, or S Corporation http://www.huntsvillepr.com/huntsville-alabama/2008/11/how-to-choose-between-an-llc-c-or-s-corporation/ Fri, 19 Feb 2010 19:42:58 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: danyoung http://www.huntsvillepr.com/huntsville-alabama/2008/11/how-to-choose-between-an-llc-c-or-s-corporation/comment-page-1/#comment-1622 danyoung Thu, 13 Nov 2008 05:25:28 +0000 http://www.huntsvillepr.com/huntsville-alabama/?p=489#comment-1622 Small business companies are entitled to all of the benefits and tax breaks of the large firms; however, they must also observe the corporate formalities to protect their limited liability and tax advantages. Preparing minutes and resolutions is one key to securing your corporate veil. A systematic approach to keeping your minutes current is essential. You need to secure your corporate veil before you are sued or audited! There are many tax and non-tax issues to address before you form a new business entity. You choices can have a long-lasting effect on your business, associates, family, taxes, etc. Choose wisely. If you hire a "mill" to form your company for you, you will likely pay from a few hundred dollars to a small fortune. And, you may only get a nice looking binder with your filed articles and a bunch of blank forms that you might not know what to do with. For example, your corporation will need to adopt bylaws and hold its organizational meetings, elect directors and officers, and issue the shares. Can you do that yourself? If not, then you need help. If your lawyer does it for you, you will pay lawyer rates; so, depending upon what he does for you, yes, it could be $2,500. Or more. If you form an LLC, can you write an approprriate operating agreement for your new business enterprise? If not, you'll have to pay someone to do it for you. And, you should have an operating agreement. The point is, filing with the state is only the beginning for your new company. There are formalities that must be attended to or you could lose your "corporate veil" - this is not a good thing. Small business companies are entitled to all of the benefits and tax breaks of the large firms; however, they must also observe the corporate formalities to protect their limited liability and tax advantages. Preparing minutes and resolutions is one key to securing your corporate veil. A systematic approach to keeping your minutes current is essential. You need to secure your corporate veil before you are sued or audited!

There are many tax and non-tax issues to address before you form a new business entity. You choices can have a long-lasting effect on your business, associates, family, taxes, etc. Choose wisely.

If you hire a “mill” to form your company for you, you will likely pay from a few hundred dollars to a small fortune. And, you may only get a nice looking binder with your filed articles and a bunch of blank forms that you might not know what to do with. For example, your corporation will need to adopt bylaws and hold its organizational meetings, elect directors and officers, and issue the shares. Can you do that yourself? If not, then you need help. If your lawyer does it for you, you will pay lawyer rates; so, depending upon what he does for you, yes, it could be $2,500. Or more.

If you form an LLC, can you write an approprriate operating agreement for your new business enterprise? If not, you’ll have to pay someone to do it for you. And, you should have an operating agreement.

The point is, filing with the state is only the beginning for your new company. There are formalities that must be attended to or you could lose your “corporate veil” – this is not a good thing.

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