• Limited Liability Company and taxes: LLC can elect to be taxed as a separate entity, like a C Corporation. It doesn't have to be a pass-through entity, like an S Corporation. When you form an LLC, you get to decide which way you want it to be taxed.

• Piercing The Corporate Veil: the quickest way for you to lose the protection afforded by a separate business entity is to dabble into the cash (accounts) of that entity and use it for personal things. That's something to think about.

• Tax Attorney vs. CPA: An attorney will tell you what you can do to pay less in taxes. A CPA will tell you what you can't do when you are trying to pay less in taxes. (some industry-specific humor for you)

• The more paper the less problems: Maintain all your records and follow corporate formalities even if you don't believe anyone would ever require you to present them. Keep the meeting minutes, bylaws, operating agreements, and so on in perfect order. If you ever need to produce them, chances are, finding them (or writing them from scratch and backdating) will be the least of your problems at that point in time.

• Don't commit anything through your business entity that you wouldn't commit if you weren't protected. Corporate protection is a defensive mechanism, not an offensive one. Judges are not stupid, and they can clearly see the difference between the former and the latter. If you follow this one simple rule, you'll be fine. Otherwise, no amount of corporate protection will save you.

LLC is a hybrid business entity which is having the characteristic of both a corporation and a partnership.

The owners are called as members and not partners and shareholders, and unlimited number of members or corporations or other LLC's can join limited liability company. LLC's must have at least one member and maximum unlimited members. LLC's must file the evidence of their existence to the secretary of state which they choose...

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S Corporation is a corporation that meets with the requirements of IRS and is taxed under Subchapter S of the Interval Revenue Code.

Under the state law, S corporations are treated as corporations. They are separate legal entities and provide shareholders limited liability, just like C corporation. Payments to the shareholders by the corporation are distributed as tax free, if earnings were previously taxed...

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he biggest advantage of a corporation is that it provides limited liability. Limited liability means a person cannot be held responsible for any debts related to the company. A person's liability is limited to a fixed sum mostly to the value of a person's investment in a company. The same rule applies to limited liability partnership and limited partners. They also have limited liability. And in contrast to this, in general partnership and sole proprietorship, they are liable for the debts of a business.

There are many advantages of incorporating, some are:

• Limited liability for the shareholders and all owners of the corporation. They cannot be held personally liable for any debts related to business.

• Corporation lasts long compared to other business forms. If there is only a sole owner, then death of the owner means the end of business. And if business is incorporated then it can continue even after the death of any person like shareholders, director, managers, etc. The ownership can also be transferred by selling shares in corporation.

• It is also easier to raise capital for the business. Corporations can raise capital by selling shares. Whereas in sole proprietorship capital cannot be raised by this method.

• You can also keep your identity and business affairs private and confidential. You can remain anonymous and then can also be a part of a business.

Although a shareholders liability is limited, the shareholder may still be liable for his/her own acts. If the shareholder has given personal guarantee to the debts of the company then he is responsible if the company cannot pay. And other shareholders may not if they have not given personal guarantee.

Generally in corporation, everyone from shareholders to directors have limited liability. In every condition their personal belongings will belong to them only. This is a great advantage in corporations.

What is Registered Agent

A registered agent is an agent or individual who is designated to receive service of process when a business is doing legal action like lawsuit.

Most states in the U.S. require any business entity formed within their border to designate and maintain a "Registered Agent".

If the business is not maintaining a registered agent then the business entity would be penalized by paying additional penalty fees or in some cases a jurisdiction can revoke a business's corporate or legal status.

Sole Proprietorships

Sole proprietorship is a business entity in which the whole business is run by a single person and he is the only owner.

IRS considers small business as a sole proprietorship unless you have registered as a corporation.

In this form of business the sole proprietor have an unlimited liability. If the business incurs loss or debt than the proprietor is only responsible for this.

Doing Business As

DBA is a legal term and it means that the name of business or operation does not includes the legal name of its owner, name of partners, or the official name of partnership or corporation that owns it.

The difference between an actual and a fictitious name is very important in the business. The main reason for this is because the fictitious name gives no indication of the entity which is legally responsible for it.

DBA statements are often used with franchise. Franchisee has a legal name and conducts business under the franchise's brand name.

In Which State To Incorporate

After deciding a business to incorporate, comes another question of where to incorporate.

What if you reside in one state and want to setup your business in another state. You can do this by setting up foreign corporation in other state where you wish.

This means you can establish a corporation in one state and can also do business in another state. By doing this you can also get the advantage of expanding your business. But doing this is not very easy.

Directors of a Corporation

A board of directors is a body of certain appointed persons who manages the activities of a company.

Directors are the members of the board of directors. They are individuals who can be manager, owner or any other person who is elected by the owner of the business. Directors who are owners or managers are referred to as inside directors.

Mostly the appointment and removal of board of directors is voted by shareholders in the general meeting. They can also leave.

Corporate Accounting

Your business will be judged by three measures: balance sheet, profit and loss statement and cash flow statement. The balance sheet shows how the position of business is.

It is better to make separate business accounts in a bank rather then just having one personal account. It helps in tracking of expenses and incomes of business.

Cash flow control is a method of projecting cash for future needs. It is a statement through which you can predict your future needs for cash. This is necessary as you can know if you need cash for future or not or need more cash.

Business Loans

If you don't have money for starting a business, then you can take a loan either from bank or from some financing company. The main thing is that you must search for a financial company or bank that gives loan at the lowest rate.

When taking loan there are various conditions like how much down payment you must give, interest on the loan and in how much term you must repay the loan.

Many times Small Business Administration (SBA) assist in giving loan to small businesses. SBA is a U.S. agency that gives support to small businesses. The SBA gives loan directly to small businesses and acts as a guarantor for bank loans.

What's a Small Business?

Business which is independently owned and operated with a very small number of employees is known as small business. This definition of "small" is different in different countries, like in United States it is under 100 employees.

There are many advantages of small business. The main advantage is that the capital required to start the business is very low. Even if you have very little money, you can start this type of business.

Many people like to take their own business decisions and they want freedom from their bosses so these types of people can do small business. In most economies, small businesses are the major job providers.

LLC's Certificates of Formation

Certificate of formation is the main document used to form a limited liability company. It should include your limited liability company's name, the purpose of establishing, its address and the name and address of the registered agent.

This document must be filed to the state registrar or to a government body. You can also form your LLC online in the internet with the help of a website. During the time of filing certificate of formation a filing fees is required to be paid.

It is also better to create a limited liability company's operating agreement. It guides all the owners to operate the business. It includes information like what duties each member has.

Liquidation

Liquidation is also known as winding up or dissolution. Liquidation is a process by which a company's existence is bought to an end. Liquidation comes in two forms, compulsory liquidation and voluntary liquidation.

Some jurisdictions permit the companies to wound up on "just and equitable" grounds. The applications for "just and equitable" dissolution are generally brought up by a member of the company who thinks that the affairs of company are conducted in a prejudicial manner.

When a company goes into liquidation, a liquidator is appointed to gather all the company's assets and settle all the claims against the company. If any surplus is left after paying all the creditors then this surplus is distributed to all the members.

Company Bylaws

The corporate bylaws are official plan on how a corporation runs and how it operates in the future. It governs the internal management of organization. Bylaws state the rights and powers of directors, officers and shareholders and how the meetings of director are conducted. Corporate bylaws are not filed with any state or agency.

Bylaws are drafted by a corporation's founders and under the authority of its Charter or Articles of Incorporation. Bylaws cannot be amended by just corporation's board of directors and a majority of two-third members are required to amend bylaws.

Bylaw is often referred to as constitution. The corporation not exists formally if bylaws are not adopted, unless otherwise provided by law.

Company's Cash Flow

Cash is the lifeblood of every business. Therefore proper management of it is required. You should not pay early and keep cash yourself for as long as possible. If the party gives you discount for paying early then only you should pay.

If you are doing business then you should always collect money as fast as you can. Send out your invoices with the goods you will be delivering.

Always check the financial health of a customer before giving him credit. Ask the customer for minimum five business references and also call them and inquire about the customer.

C Corporation

C Corporation is a corporation that may have unlimited number of shareholders and can also include shareholders who are foreign citizens. Mostly major companies are under C corporation for Federal income tax purposes.

The income by C corporation is taxed. Sometimes "double taxation" also happens, as the company pays tax on its profits and shareholders are also taxed on the dividends they receive.

After deducting all the business expenses like salaries, interest payments and fringe benefit, the corporation pays tax on its profit. Then the dividends are distributed to the shareholders who must also pay tax on that money.

Article of Incorporation

Articles of Incorporation are the legal document which has to be filed before establishing a corporation. They are the primary rules which govern the management of a corporation and are filed with a regulatory agency, registrar or state.

The name of the corporation must be unique. The name must include corporation's name plus words like "incorporated", "corporation", or "limited". In rare cases, some types of names are prohibited except by special permission, words which represent a government agency or like must be avoided.

Many states permit a corporation to be formed by one person only and in some rare cases it may require 3-5 members. Thus, articles of incorporation are extremely necessary for the formation of a corporation.

Corporate Laws

Corporate law is the law of the business world. Corporate law shows how shareholders, employees, directors, creditors, etc interact with one another. Corporate governance is primarily the study between board of directors and persons who elect them like employees and shareholders.

This law will decide which rules are mandatory and which rules can be exempted from. Some important rules which cannot be exempted are duties of directors which they owe towards company, how to fire board of directors, procedure of a general meeting, procedure for dividend paid out or how many members are required for amending the constitution.

The United States split the corporate constitution into two separate documents named Memorandum of Association and Articles of Association. The Memorandum of Association is the primary document and regulates the company's activities with outside world.

Starting a Business

This question comes in mind to people who are wishing to prosper and earn money in life by doing something different. But you must have the guts and capital to start a business.

First thing to starting up a business is to make a business plan. You must make a plan yourself or seek the guidance from a friend, relative or any person you know who is good in this. You must consider choosing the field to start a business in which you are good at.

All type of businesses require financing. For a successful business, capital is very important. A successful business requires a good capital also. You must also plan for the initial expense of setting up your business.

Limited Liability Partnership

Limited Liability Partnership has elements of both, partnerships and also corporations. In LLP, one partner is not held responsible for another partner's wrong action or misconduct.

Limited partnership and limited liability partnership, both are different. LLP is more suited for business where all investors wish to control the management and the business.

In the United States, each state has its different law regarding limited liability partnership. The liability of partners also varies from state to state. Section no. 306 (c) of Revised Uniform Partnership Act grants all LLP's a form of limited liability which is similar to that of corporation.

Amending Incorporation

Amendments to Articles of Incorporation may be required due to the changing business circumstances. Amendments to Articles of Incorporation generally require the corporation to file it to the state.

The company must file a Statement of Information with the state. This is compulsory for filing certificate of amendment. Statement of incorporation has the information like who is the authorized person or who can make changes in the company.

The only way to change the name of LLC or corporation is to file an amendment to the articles of incorporation. Thus, amendment to the articles of incorporation are necessary to change any information related to business.