How To Incorporate or Form an L.L.C. in Delaware or Florida Online
Purpose: This article was designed with the goal of introducing to its readers the basics of incorporating online - incorporation terms and defintions, which type of formation to choose (corporation vs.
llc), which state to incorporate in, which incorporation / LLC packages are the best for your type of business, etc.
Refer to the bottom of this article for any questions or comments.
Terms To begin, we need to know some basic terms for business formations.
Listed below are some of the most commonly found terms, with their respective definitions: Articles of Formation: (Sometimes referred to as the "Articles of Organization" or a "Certificate of Formation", depending on the state involved) - A document that is required by law with the registration of a limited liability company (LLC).
Articles of Incorporation: (Sometimes referred to as a "Certificate of Incorporation", depending on the state involved) - A document, conforming to state law, that must be filed with the state and explain the purpose of a particular corporation, the name, the primary place of business, director names, and details involving stock types and amounts that are to be authorized.
Bylaws: The regulations (rules or laws) of a company that provide for the proper conduct of the company's business actions.
Certificate of Good Standing: (Also known as a "Certificate of Authorization") - A document, issued by the state, that proves a company to be in existence and authorized to do business in that state.
This document typically states the following: that it exists, that the Articles of Dissolution have not been filed, that it is authorized to do business in that state, that its annual report has been filed, and that all fees and taxes have been paid.
Corporate Kit: A binder or collection of documents that contains necessary materials with regards to the administration of a corporation or LLC.
Such documents can include, but are not limited to: company minutes, bylaws, corporate seal, and stock certificates.
Corporation: A legal entity which often has rights that are similar to that of a natural person.
This type of company is separate from those persons who own it, allowing the corporation to own property, incur debts, sue, or be sued.
Because of this separation from the corporation's owners, each stockholder can only lose what they invest.
This is commonly referred to as "limited liability", but should not be confused with the type of entity known as the "limited liability company (LLC").
LLC (Limited Liability Company): Based on the laws of the particular state involved, an LLC is a legal entity that provides the limited liability benefits of a corporation, along with the pass through taxation of an S-Corporation or partnership.
Registered Agent: (Sometimes referred to as a "Resident Agent", depending on the state) - The person designated to receive and collect essential legal documents on behalf of the company represented.
This agent must be located, and available, at the provided address in that state.
A registered agent is required for a company to remain in existence.
Series LLC: A unique LLC with unlimited asset segregation potential.
Under one LLC you can set up numerous "series" owning separate assets.
According to the statute, 6 Del.
C.
Section 18-215, "the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the company generally or any other series thereof.
" Types of Entities Now that we know some basic terms, we need to know which type of entity we want for our business.
The two most common forms of entities are (1) Corporations and (2) LLC's.
After referring to the definitions (above) of these two types of entities, we can see that a corporation is the traditional form of big business - where the business is separate from the stockholders, thus allowing limited liability of the owners.
An LLC also shares this element, hence the name "Limited Liability Company".
What is different about an LLC, though, is the negation of the "double taxation" (a major drawback of the corporation form).
A common question, then, is, "Why form a corporation if an LLC shares the concept of limited liability but also has the advantage of single taxation?"There are 2 answers to this question: (1) - an LLC is a fairly new type of business formation and is not well-known to some older and more traditional entrepreneurs.
(2) - A corporation has some tax and other benfits that an LLC does not share and thus makes it more advantageous for some types of industries.
Due to the short nature of this article, we will not delve into the question of which specific advantages a corporation has over an LLC for certain industry types.
Instead, readers are encouraged to speak in more depth to Incorporating and LLC Specialists [http://www.
incnow.
com] with any specific questions.
As far as a recommendation, an LLC (limited liability company) is usually recommended for any small-to-medium-sized business.
Which State? The next thing an entrepreneur must decide is, "Which state do I want to incorporate or form an LLC in?"Though each company has its own set of likes and dislikes, most companies choose to form their business in a state with more corporate-friendly taxes and regulations.
The two most recommended states to incorporate in are Delaware (the number one choice for most companies) and Florida (another good option).
For more information about specific state benefits, look at: Delaware and Florida LLC / Corporation Formations [http://www.
incnow.
com].
Types of Packages The last basic concept that an entrepreneur must consider is which type of package to choose.
The answer to this question is the easiest of all - almost always go with the complete package.
Any incomplete package will leave you re-purchasing packages and wondering what steps you are missing.
A good incorporation package will offer ALL of the necessary tools to not just initially form your business, but also to maintain your business in the years to come.
Conclusion: Though a short article such as this cannot begin to go into all the details necessary to form and run a business, it should be good enough to start and guide you on your daunting journey.
Farewell, and good luck on your path to forming a new business!
llc), which state to incorporate in, which incorporation / LLC packages are the best for your type of business, etc.
Refer to the bottom of this article for any questions or comments.
Terms To begin, we need to know some basic terms for business formations.
Listed below are some of the most commonly found terms, with their respective definitions: Articles of Formation: (Sometimes referred to as the "Articles of Organization" or a "Certificate of Formation", depending on the state involved) - A document that is required by law with the registration of a limited liability company (LLC).
Articles of Incorporation: (Sometimes referred to as a "Certificate of Incorporation", depending on the state involved) - A document, conforming to state law, that must be filed with the state and explain the purpose of a particular corporation, the name, the primary place of business, director names, and details involving stock types and amounts that are to be authorized.
Bylaws: The regulations (rules or laws) of a company that provide for the proper conduct of the company's business actions.
Certificate of Good Standing: (Also known as a "Certificate of Authorization") - A document, issued by the state, that proves a company to be in existence and authorized to do business in that state.
This document typically states the following: that it exists, that the Articles of Dissolution have not been filed, that it is authorized to do business in that state, that its annual report has been filed, and that all fees and taxes have been paid.
Corporate Kit: A binder or collection of documents that contains necessary materials with regards to the administration of a corporation or LLC.
Such documents can include, but are not limited to: company minutes, bylaws, corporate seal, and stock certificates.
Corporation: A legal entity which often has rights that are similar to that of a natural person.
This type of company is separate from those persons who own it, allowing the corporation to own property, incur debts, sue, or be sued.
Because of this separation from the corporation's owners, each stockholder can only lose what they invest.
This is commonly referred to as "limited liability", but should not be confused with the type of entity known as the "limited liability company (LLC").
LLC (Limited Liability Company): Based on the laws of the particular state involved, an LLC is a legal entity that provides the limited liability benefits of a corporation, along with the pass through taxation of an S-Corporation or partnership.
Registered Agent: (Sometimes referred to as a "Resident Agent", depending on the state) - The person designated to receive and collect essential legal documents on behalf of the company represented.
This agent must be located, and available, at the provided address in that state.
A registered agent is required for a company to remain in existence.
Series LLC: A unique LLC with unlimited asset segregation potential.
Under one LLC you can set up numerous "series" owning separate assets.
According to the statute, 6 Del.
C.
Section 18-215, "the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the company generally or any other series thereof.
" Types of Entities Now that we know some basic terms, we need to know which type of entity we want for our business.
The two most common forms of entities are (1) Corporations and (2) LLC's.
After referring to the definitions (above) of these two types of entities, we can see that a corporation is the traditional form of big business - where the business is separate from the stockholders, thus allowing limited liability of the owners.
An LLC also shares this element, hence the name "Limited Liability Company".
What is different about an LLC, though, is the negation of the "double taxation" (a major drawback of the corporation form).
A common question, then, is, "Why form a corporation if an LLC shares the concept of limited liability but also has the advantage of single taxation?"There are 2 answers to this question: (1) - an LLC is a fairly new type of business formation and is not well-known to some older and more traditional entrepreneurs.
(2) - A corporation has some tax and other benfits that an LLC does not share and thus makes it more advantageous for some types of industries.
Due to the short nature of this article, we will not delve into the question of which specific advantages a corporation has over an LLC for certain industry types.
Instead, readers are encouraged to speak in more depth to Incorporating and LLC Specialists [http://www.
incnow.
com] with any specific questions.
As far as a recommendation, an LLC (limited liability company) is usually recommended for any small-to-medium-sized business.
Which State? The next thing an entrepreneur must decide is, "Which state do I want to incorporate or form an LLC in?"Though each company has its own set of likes and dislikes, most companies choose to form their business in a state with more corporate-friendly taxes and regulations.
The two most recommended states to incorporate in are Delaware (the number one choice for most companies) and Florida (another good option).
For more information about specific state benefits, look at: Delaware and Florida LLC / Corporation Formations [http://www.
incnow.
com].
Types of Packages The last basic concept that an entrepreneur must consider is which type of package to choose.
The answer to this question is the easiest of all - almost always go with the complete package.
Any incomplete package will leave you re-purchasing packages and wondering what steps you are missing.
A good incorporation package will offer ALL of the necessary tools to not just initially form your business, but also to maintain your business in the years to come.
Conclusion: Though a short article such as this cannot begin to go into all the details necessary to form and run a business, it should be good enough to start and guide you on your daunting journey.
Farewell, and good luck on your path to forming a new business!
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