Incfile – The Ultimate Guide to Starting Your Business Online
Unlike its competitors, Incfile has a large library of resources to help entrepreneurs understand the business filing process. The company also demystifies terms like registered agent and EIN.
Users can form LLCs, C-corporations, S-corporations, and nonprofits using Incfile. They can also obtain a Certificate of Good Standing for a fee that includes state fees.
What is an LLC?
An LLC is a business entity that offers owners liability protection by separating their personal finances from the company’s. The formation process varies by state, but most include filing articles of organization and obtaining an EIN (employer identification number).
The articles typically list the company name and address and provide details of owners or members. You can draft the document or use a generic version provided by your state. Your state might also require you to publish a notice of its approval.
LLCs can choose either a member-managed or manager-managed management structure. In the former, owners oversee daily operations; in the latter, a group of managers is appointed.
An LLC can also elect to be taxed as a corporation or pass-through entity. Generally, pass-through entities avoid double taxation that occurs when corporations are taxed on profits and then again when those profits are distributed as dividends to shareholders. An LLC can also obtain business insurance.
How to Form an LLC
Forming an LLC offers you the benefits of a sole proprietorship while protecting your personal assets. However, there are specific rules you must follow based on where your business is located. New York City, for example, has strict zoning and licensing regulations that must be followed in order to start an LLC. Using New York’s step-by-step Business Express Wizard can help you identify what regulations apply to your location.
Once your business meets all of the state requirements, you can open a bank account in your LLC name and establish business credit. You can also file for a federal Employer Identification Number (EIN), which is like a Social Security number for your business. You can do this for free on the IRS website.
Some states require LLCs to maintain certain types of insurance, such as workers’ compensation and general liability. It’s a good idea to consult your local small business advisor for more information about your state’s requirements.
What is an S-Corporation?
An S corporation (S corp) is a type of corporation that has elected a special tax status with the IRS. This status allows corporate income, losses, deductions and credits to pass through to shareholders who then pay them on their personal income tax returns at individual rates rather than being subject to the double-taxation that C corporations face. S corps are limited in number of shareholders and can only include individuals, estates of decedents and certain trusts. Partnerships, other corporations and nonresident aliens cannot be shareholders.
S corporation ownership offers the best of both worlds: corporate liability protection (meaning that a shareholder’s personal assets can’t be touched by business creditors) and tax treatment similar to a partnership. In addition, if a shareholder works in the company, they can be paid a reasonable salary and avoid self-employment taxes (though FICA taxes are withheld). S corps also allow owners to write off startup losses that would otherwise be offset against their income.
How to Form an S-Corporation in Texas
Keeping up with local, state and federal regulations is an important part of running a business. Depending on the size of your company and its structure, you may be subject to several different types of regulations. Incfile offers a service that, for one fixed fee, researches your company and prepares a comprehensive package of all relevant permits, licenses and tax registrations.
S corporations can offer self-employment tax savings if structured correctly. They also provide limited liability protection for owners by separating their personal assets from those of the corporation. However, the IRS has strict rules about who can own an S corporation and other restrictions.
The Gold plan adds an operating agreement and other business operations extras to the Silver package. It also includes a free domain name and business email for one year and expedited express state filing. Reviews on this plan tend to show satisfaction with the speed and reliability of the service.
