Business Formation

Each business has unique needs and goals. Hinkins Law, LLC works with you to determine what business structure will work best for your business.

A corporation has been defined under the law as an entity having authority to act as a single person. This means it has many of the rights and obligations of any other citizen. A corporation can sue or be sued, purchase and hold property (real and personal), pay taxes, be fined, enter into contracts, and create articles of incorporation and bylaws. A corporation’s articles and bylaws make the corporation a legal entity under the law and control how the company is run.

There are different kinds of corporations and business structures. You should find the structure that fits the needs and wants of your business. The following is a list of some of the different types of structures and organizations available: C corporations, charitable corporations, close corporations, collapsible corporations, domestic corporations, dummy corporations, foreign corporations, nonprofit corporations, parent corporations, private corporations, professional corporations, public corporations, public-service corporations, registered corporations, S corporations, shell corporations, small-business corporations, subsidiary corporations, limited liability companies, limited liability professional companies, limited liability partnerships, partnerships, sole-proprietorships. Below is a brief statement concerning a few of the commonly utilized business structures.

• (S) Sub Chapter S Corporations An S Corporation is a corporation that is taxed through its shareholders rather than through the corporation itself. An S Corporation must meet certain federal tax guidelines. These guidelines are found in Chapter 1, Subchapter S, of the Internal Revenue Code, which permit smaller companies to avoid paying income taxes by utilizing flow-through taxation. In an S Corporation, the shareholders of the company pay taxes on the income individually and may deduct losses the company has suffered individually. The size and structure of an S Corporation is regulated and limited by the government.
• (C) C Corporations A C corporation is a corporations wherein the shareholders enjoy the benefits of limited liability, centralized management, transferability of ownership, and continuity of the corporate entity. All corporations who do not elect S corporation status under the Internal Revenue Code are C corporations by default. While many large, public corporations are C corporations, a close corporation can also choose to incorporate as a C corporation.
• Close corporations are simply corporations whose stock is held by a relatively small number of shareholders. Close corporations are often utilized for family-run businesses.
• (LLC) Limited Liability Company A limited liability company is a structure that provides its shareholders limited liability similar to a corporation, tax benefits similar to a partnership, and the ability to run the organization like a partnership or corporation.

How do I form a business? The easiest way is to contact Hinkins Law, LLC. We will ask you the necessary questions and setup the entity without any hassle to you. Most organizations are formed under state law and each has specific statutory requirements. Depending on the structure of the business, you will need to draft either Articles of Incorporation or Articles of Organization, create bylaws, determines how the business will be financed, issue stock, determine how profits and losses will be allocated, and then file the appropriate documents with the state.

What are my other options?

In some cases, a corporation or LLC is not the best way for you to do business.

You may elect to operate as a sole proprietor. In this capacity, you get to make all of the decisions, but you will also carry the liability and responsibility alone. In some situations, this may be the best alternative.

You may want to form a partnership. A partnership provides a structure for two or more people to run a business. Each partner will make contributions to the business, and each partner will reap the benefits or suffer the losses of the partnership. Partnerships are often aided by a well-drafted partnership agreement.

Not sure where to start? The brief descriptions above only scratch the surface of varying business structures. Forming a business is more complicated than walking into a store and buying a pair of shoes that fit. You will want to understand the state statutes governing your structure, tax ramifications, and the degree of liability to which you will be exposed.

Contact Hinkins Law, LLC today, and we will help get your business off on the right track. Call 1-800-381-9656.