Types of legal entities:
Sole Proprietorships – A sole proprietorship has only one owner. A sole proprietorship can be created without formalities. In the sole proprietorship, the owner makes all the management decisions for the business. All of the profits and liabilities of the business also belong to the sole proprietor. Thus, if the business assets cannot pay the bills, the owner of the sole proprietorship will be held personally liable to the creditors. A sole proprietorship is not a legal entity – it does not exist apart from its owner.
General Partnerships – A general partnership does not need formalities. In a general partnership, two individuals agree to own the business and make management decisions for the business. The partners share the profits and financial losses of the partnership. The partners of the general partnership are also individually liable for the business debts if the business cannot pay for its bills. Additionally, a partner in a general partnership may bring contract, tort and criminal liability on to the other partner, because the partners are considered agents of the other. Partners, however, have a duty to act in the best interest of the partnership.
Limited Partnerships – In a limited partnership, there are one or more general partners and one or more limited partners. The general partners make the management decisions of the business, while the limited partners do not. The general partners, however, also assume 100% of the risk for the liabilities and debts of the limited partnership. The limited partners, on the other hand, only risk the financial contributions they made to the limited partnership. Generally, all the partners in the limited partnership share the profits of the business.
Corporations – A corporation is a legal entity apart from its owners (shareholders) and managers (officers and directors). A corporation can buy and sell property, enter into contracts, and be sued in it’s own name. A corporation can only be created by state statute. Thus, in order to form a corporation, you must follow the specific guidelines required by State of the Commonwealth. The shareholders of a corporation are generally not responsible for the debts of the corporation aside from their financial contribution to the corporation.
Limited Liability Companies – A limited liability company (LLC) shares the limited liability of a corporation, but is not held to the same strict management requirements under law. The LLC is, however, a legal entity created only by state law. An LLC is generally defined as a business entity that consists of one or more persons. The LLC has managers, members and sometimes, employees. The owners (or members) of the LLC participate in the management of the business. Members, managers and employees are not held personally liable for the debts of the business.
Exactly what do I get for the fees I pay? This is always a good question for consumer of legal services to ask, but especially so in the area of our corporate legal services. Our firm can vary widely as provided by your incorporating attorney, as you must be especially wary of any non-attorney who may say that they can incorporate your business for you. This may constitute the criminal activity known as the unauthorized practice of law and most certainly will leave you under protected even if you get temporarily richer. When our firm quotes you our fee to incorporate, unless you specifically request a tailored package, reduced or augmented services, you can expect our firm to do the following:
Our firm will work with you in conjunction with your tax advisor or CPA on the best entity for your needs, e.g., C-Corporation, S-Corporation, Limited Liability Company, and General or Partnerships.
Our firm will file the appropriate Articles of Incorporation or Organization for you. The average corporate filing fee to the State Corporation Commission will range from $25.00 for non-profit, $75.00 for corporations and $100.00 for limited liability companies.
Our firm will supply minutes for your first organization meeting, including implementation of medical insurance or reimbursement plans, borrowing and banking resolutions and other personalized features. We can also order and maintain your corporate book if so desired.
Our firm will issue the proper stock subscriptions letters, or other receipts for the purchase of shares in the new corporation or company.
We will obtain your Federal Identification Number and file your “S” election with the Internal Revenue Service if appropriate.
We can provide you with general assistance in making contact with the Commissioner of Revenue and other licensing agencies as well as render legal advice to you as needed during your start up period.
You may ask what the cost would be for maintaining your company or corporation in order to keep it in good standing with the State Corporation Commission. You can expect to pay an annual filing fee each year with the State Corporation Commission. These fees range from $25.00 for non-profit corporations, $75.00 for corporations and $100.00 for limited liability companies. If you choose our firm to serve as your Registered Agent, our annual fee is $150.00 which becomes due in the month of your incorporation each year. As your Registered Agent, our firm will make certain that your annual meeting is documented and your annual report is timely filed. Furthermore, as your Registered Agent, should our firm receive any notice of adversary proceedings or lawsuits against you, you can expect our firm’s utmost to promptly and immediately notify you. In addition, if our firm is serving as your Registered Agent, you will have telephone access to the corporate attorney without charge. If it appears that further and more extensive legal service or advice is needed, we will discuss the additional fees to be charged BEFORE you incur any new legal fees.
Please call us today for an appointment to see what we can do for you to start your new business venture.