How to start your own (for-profit) business:
1. Pick a Name!
-Is your awesome name avail? Check.
*dont reserve the name before u file. waste of money
– Pick a state to incorporate in. This doesn’t need to be the same state you’re gonna do business in, but generally u need a “resident agent”, a rep/address, in that state. Some states have certain benefits they give you for incorporating in their state, u have to do some research to find out what they are. but for a small biz it’s not really that important right now. (when/if u get bigger u can incorporate in that state under a new biz name etc)
– Type of corporation. u have to pick a type of corporate ur gonna be.. here are some of the advantages/disadvantages of each one:
LLC: “Limited Liability Corporation/Company”. this is prob what ur gonna wanna do. this means that u have limited liability. so, for example, someone sues ur company, they cant take all ur personal shit. hence, LIMITED liability. Instead of an owner ur called a member (same thin tho).
LLP: “Limited Liabilty Partnership”. This is like an llc except its a ‘partnership’. and its usually used with professionals like lawyers or medical field. once again it helps them in the liability aspect (being sued and stuff)
Limited Liabilites (both types) u don’t get ‘double’ taxed (corporation and shareholder tax) when u do get that taxing as a normal ‘c’ corporation. Since u r a member u get protection if something ends up fucked up like ur company doesn’t pay taxes, it goes bankrupt, etc.ur company has to pay but generally ur safe (they cant take ur shit).
“C” Corporations: “General Corporations”. This is the older more general type of corporation. u are an owner and u can get some easier benefits like stocks and stuff (u don’t get stock option in LLCs). but u get taxed more and are more liable.
SO If ur gonna have a few owners or even one, whatever, the LLC is a better option. general corporations are cool too but u gotta pay more taxes, and thats if u get more investors in ur corp. LLCs are generally the way to go.
-Actually incorporating. So u decided wat type ur gonna do. nowadays u can generally incorp. online! So im just gonna use AZ and NV as examples.
To incorp u generally go to the Secretary of State page for your state!
NV’s site is easier to navigate thru so I’ll use that to guide u. Say u wanna do an LLC, use this form (NV)
Just fill out the form. Since this is ur initial filing, u gotta pay more, of course. So u gotta pay:
125$ Inital List of Managers
75$ Articles of organization
not bad tho for startin ur own biz. so remember if u do outta state, then u gotta use someone address there, and it’s just to start, after u incorp u can change the delivery address to ur out of state house. tho ur still supposed to have an address in that state. can’t be PO box tho 😦 so u gotta have/know some that lives there, or use a ‘resident agent’ which is basically some dude who gets paid for u using his/her address lol.
AZ: LLC form:
Arizona is kinda tacky lol. In AZ u gotta publish ur filing in the newspaper within 60 days of filing. here’s the list of where u need to publish depending on where your going to work.
50$ Inital fee
-Where u file doesn’t matter THAT much. There are benefits to filing in different states but even if u file in NY u can do biz in AZ (u need to file for a tradename/doing business as (DBA) or register with the state but u still can do it. and the fee is like 10 bucks, if that)
-Get Copies of ur Initial Filings! Congrats u just made a bidniz! lol :]
Starting something? this is a really good site to check out: http://www.azcommerce.com/BusAsst/SmallBiz/
If you have any questions ask me! oh yea im NOT a lawyer, dont sue me. lol.
More info In Depth
AZ starting a biz FAQ (.gov): http://www.azcc.gov/divisions/corporations/faqmanual.aspcf
Why Incorporate in Nevada?
- No Corporate Income Tax
- No Taxes on Corporate Shares
- No Franchise Tax
- No Personal Income Tax
- Nominal Annual Fees
- Nevada corporations may purchase, hold, sell or transfer shares of its own stock.
- Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.
- No Franchise Tax on Income
- No Inheritance or Gift Tax
- No Unitary Tax
- No Estate Tax
- Competitive Sales and Property Tax Rates
- Minimal Employer Payroll Tax – 0.7% of gross wages with deductions for employer paid health insurance
- Nevada’s Business Court
- Developed on the Delaware model, the Business Court in Nevada minimizes the time, cost and risks of commercial litigation by:
- Early, comprehensive case management
- Active judicial participation in settlement
- Priority for hearing settings to avoid business disruption
- Predictability of legal decisions in commercial matters
(I couldn’t find one for why inc. in AZ)
A limited liability company (“LLC“) is as a legal entity that is a hybrid between a partnership and a corporation. The owners (called “members“) have many of the same tax benefits as a partnership, while at the same time being able to take advantage of the limited liability characteristics of a corporation ).
Unless the members elect to be taxed as a corporation, the tax treatment of a properly organized LLC is very similar to that of a partnership or sole proprietorship. Profits and losses are passed through to the members of the LLC and there is no income tax at the business level.
Like a corporation, the members of an LLC are generally shielded from personal liability for the debts and obligations of the company.
You form an LLC by filing a “certificate of formation” or similar certificate with the Secretary of State. Members of LLCs typically enter into an “operating agreement” that establishes how the LLC is run.
Many of the provisions of an LLC operating agreement are similar to those contained in a typical partnership agreement. For example, the operating agreement usually contains a “buy-sell” agreement governing how and to whom you can transfer membership interests in the LLC.
Generally, LLCs may have an unlimited number of owners and there are no restrictions on the type of persons who may be owners. Some states require that an LLC have at least two owners.
One advantage of an LLC over a corporation is that there is more flexibility in management. For example, an LLC may be managed in the following ways:
- Solely by its members
- By its members and a management committee serving in a function similar to the board of directors of a corporation or
- By its members, a management committee, and officers
It may be possible to achieve many of the same benefits of an LLC through use of an S corporation. However, an LLC may afford the additional benefit of being able to provide for allocations of profits, losses and distributions disproportionate to the percentage of equity interest held in the LLC. And the shareholders of an S corporation must usually be individuals and cannot exceed 75 in number. LLCs may not be subject to the same limitations.
An LLC may have more than one class of equity interest, as well as wholly owned subsidiaries whose assets, liabilities, and operating results will be treated independently from those of its LLC parent. In contrast, an S corporation can have only one class of stock.
You can use the LLC form of conducting business without worrying about raising capital in offerings of the company’s securities, because of the protection against liability given to equity holders and the ability to freely transfer equity interests.
Because an LLC combines the protection from personal liability of a corporation with the tax advantages and managerial flexibility of a partnership, it is oftentimes the entity of choice for many new businesses.
From a practical standpoint, though, there is the potential drawback that LLCs have not been around as long as corporations and so people who you will have to work with may not be as familiar with them (for example, bankers, insurance agents, CPA’s and, yes, even lawyers).
Many states now permit professionals to operate their practices through LLCs or limited liability entities, which are sometimes called “limited liability partnerships.”
A limited liability partnership (“LLP”) is essentially the same thing as a limited liability company (“LLC”), except that an LLP is specifically designed for use by certain professions (for example, accountants, lawyers or architects).
Generally the partners in limited liability partnerships aren’t responsible for the debts, obligations, or liabilities of the partnership resulting from negligence, malpractice or wrongful acts, or misconduct by another partner, employee or agent of the partnership.
Professional organizations (such as accounting and law firms) generally prefer limited liability partnerships because they are specifically designed to limit malpractice claims against partners not involved in the malpractice. But a partner of a limited liability partnership is liable for other partnership debts and obligations as well as for their own negligence, malpractice or wrongful acts, or misconduct, and that of any person under their direct supervision and control.
Limited liability partnerships are formed by either:
- filing a certificate with the Secretary of State or
- filing a certificate to convert an existing general partnership to a limited liability partnership
limited liability=”” partnerships=”” are=””>run like general partnerships and have a similar degree of management flexibility. Income, losses and gains are passed through to the general partners according to the partnership agreement.
If there is no partnership agreement, income, losses and gains will be allocated in proportion to the partnership interests of each partner. Partners can agree among themselves as to how income, losses, and gains are divided among the partners. The partners then report the amount allocated on their own income tax returns and pay tax accordingly.
Compare LLCs vs Corporations: http://smallbusiness.findlaw.com/business-structures/llc/corporations-compare-llc.html
Good Luck on whatever you do.
Live in & Harmony, your humble servent- Filiz