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Written by : Louie Menson
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hi this is Lee Phillips I'm an attorney don't hold that against me I want to talk to you for a minute about the Articles of Incorporation if your corporation or the articles of organization or the certificate or organization or whatever your state calls this thing these are the papers that you file to create the corporation or to create the LLC you file them with a state actually the corporations and LLC's are creations of the state it's your state that's giving you permission to operate under these rules in order to have your company give you a limited liability for example and taxes structures and all that stuff so you have to have the proper Articles of Incorporation and articles of organization and you need to read them and understand them now if you go to the lawyer a lot of the lawyers will give you four or five six pages of these things the Articles of Incorporation no no no no no the states require a very minimal amount of information in order to set up the corporation of the LLC in the old days the states used to require that you have a thousand or two thousand or five thousand dollars in the bank account of the company well that's you that's not a requirement anywhere any more that I'm aware of anyway so these renewals and regulations associated with the Articles of Incorporation or the articles of organization have been parried back a lot you will actually file the Articles incorporation the articles of organization on the state website they're going to ask you a few questions the name of the company the address of the company and you have to have a registered agent in the state so they need the registered agents address and phone number and all that stuff that has to be a physical person within the state that they could get ahold of that the sheriff can come and give a lawsuit to so you need a physical person if you don't have anybody in the state where you're incorporating or forming you LLC there are lots of guys that will be more than happy to take your money and act as your registered agent so in that list the registered agent you list the home office you list this sort of stuff don't give any more information to the state than is required at a minimum because that's public information anybody can see what you filed in order to create your corporation or your LLC now you're going to have a rule book that's going to be a lot longer than the Articles of Incorporation or the articles of organization and that rule book is going to tell you how you're going to operate the company a corporation that's called bylaws in the LLC it's called the operating agreement we'll talk about those in another one of these YouTube series but for now make sure that you understand what each thing that they're asking is and that you supply the proper answers on the Articles of Incorporation or the articles of organization and make sure you don't give them any more information than is actually required there they're going to often ask what's the nature of the business and you're going to say it's a retail business or it's a consulting business or it's you can make that pretty broad and you probably ought to some attorneys say well just say any lawful activity now that will come back to bite you sometimes I've seen it happen in a number of court cases state that this is real estate investing company state that its consulting company or a chemistry laboratory or whatever it is and that's usually in the Articles of Incorporation or the articles of organization as well so the first step is understand what is required by the state give them the minimum amount up and then you have to pay your fees of course and you file your papers with this day and that makes you a company in the States eyes now that doesn't mean that you're going to get the limited liability it doesn't mean you're going to get the tax structure you want it doesn't mean anything it just means that you now have a company with the state and in one of my twenty-seven formalities that I go through on corporations and LLC's one of the first ones is let's make sure we understand what's in the Articles of Incorporation or the articles of organization
Thanks for your comment Elmira Surgeon, have a nice day.
- Louie Menson, Staff Member
what does an LLC and now I'll see your limited liability company is popular type of business structure due to its flexibility and simplicity if you're a small business owner or entrepreneur starting an LLC is one of the best ways to establish credibility and protect your assets watch this video to get a quick overview of the main features of an LLC how an LLC protects your personal assets how LLC's are taxed the importance of an operating agreement and using a professional LLC formation service at the end we'll share some free resources to help you start your own LLC and follow your business dreams millions of new businesses are formed in America every year they are legally structured as one of several choices sole proprietorships general partnerships corporations or limited liability companies the structure chosen for a business will determine who owns the business how taxes are paid and who's liable if a lawsuit or debt arises each state has specific requirements on forming and maintaining a business structure for small business owners and entrepreneurs one of the most beneficial business structures to choose from is the LLC the limited liability company an LLC has several features that make it desirable the first is LLC's acts as a legal entity separate from its owners creating what is known as a corporate veil this protection keeps the owners personal assets secure in the event of a lawsuit or unpaid business debt the second is LLC's that pass through taxation when a corporation makes a profit net profit is taxed distributed to the owners and then taxed again as personal income and LLC's profits are not taxed thus the owners only pay tax on the revenue wants and the third is that business accounting and compliance can be complicated LLC's relative to other corporate structures streamline the formation and record-keeping burden making them easy even for single owner businesses to maintain these are the main reasons you might want to start an LLC for your business there are many other reasons as well for instance privacy which we will address later and the fact that LLC owners do not have to be US citizens or permanent residents if you want flexibility and simplicity LLC's are a great option for starting a new business Oh an LLC protects your personal assets if you operate your business as a sole proprietor a partnership and for example someone gets hurt on your premises or one of your products injures someone you can be sued as an individual and lose your personal assets your home your car etc an LLC protects the business owner by acting as a separate legal entity responsible for its own debts and lawsuits the distinction between owners and business structure is known as the corporate veil it's not enough to simply establish an LLC you'll need to preserve the corporate veil by signing documents as a representative of the company and not as an individual keeping personal and business finances separate following an operating agreement avoiding fraudulent activities and keeping up to date with annual filings you can learn more about the corporate veil at our website and research common forms of business insurance you can never completely prevent problems but to prepare for the worst and protect yourself in your business forming an LLC is a good first step while LLC's are taxed taxes are one of the most complicated parts of owning a business and the penalties are stiff if you fail to comply with the law LLC's are quite flexible on how you choose to be taxed which can be used to your benefit well the details are too much to cover in this video the most important things to know about LLC taxes are if you're a single-member LLC the IRS ignores the business structure in taxes you like at wooden individual the Alice's income is reported on your personal tax return at the end of the year if you have a multi-member LLC the LLC does not pay any income taxes and all profits are passed through to the members who then pay the IRS on their individual tax return well these are the default tax elections you can also opt for your LLC to be taxed as a corporation a C Corp or an S Corp regardless of your tax designation you'll need to file yearly with the IRS check out our federal tax guide or consult with an accountant for specific details on what forms you'll need to file as for state taxes because LLC's are typically pass-through entities individual members pay state taxes not the LLC itself however there are certain types of taxes LLC's may have to pay common forms of state tax you may have to pay include franchise tax sales tax withholding tax and unemployment insurance tax again you'll want to consult an accountant for details the importance of an operating agreement when forming an LLC the most essential document is the operating agreement an operating agreement is an internal document meaning it doesn't need to be filed with the state however it's a critical component of your LLC that outlines the essential ownership and member details of the organization the operating agreement is the foundation of your LLC a living document that gives your business credibility and helps maintain your corporate veil it will outline the management and voting rules capital contributions and distributions membership and dissolution practices and all the basic stipulations on how the companies operated we provide operating agreement templates at our site we also rate and recommend professional LLC services that can help you create a custom operating agreement whose professional corporate agents are secondary companies for hire that can help you form and maintain your LLC which we'll address next using a professional LLC formation service LLC's are formed at the state level and typically cost between 50 and 150 dollars for basic formation to officially form an LLC you'll file paperwork with your state's Secretary of State and once that's been processed you'll register for an EIN or employer identification number with the IRS your ein is like a social security number for your company and is necessary for taxes and banking you can do all this on your own to save money or you can hire a professional service for an additional fifty to one hundred and fifty dollars various providers have different packages but one service to consider is hiring a registered agent when you file your formation documents with the state they'll ask for a registered agent which is like a point of contact to receive mail and official papers an LLC's registered agent can be a member of the LLC or it can be a hired service a hired registered agents of great convenience they'll help you with getting your reports filed on time will keep your business mail separate and will be available at all regular business hours to accept official mail and legal papers on your LLC's behalf final an important additional benefit of using a services privacy a professional service will provide a level of privacy by withholding your personal name and home address from the LLC's contact information there are many reasons you might not want your personal information easily accessible and associated with your busines
Thanks meatwad172327H your participation is very much appreciated
- Louie Menson
About the author
I've studied inca history at WON Institute of Graduate Studies in Glenside and I am an expert in statics. I usually feel surprised. My previous job was electronic drafter I held this position for 11 years, I love talking about model aircraft and bass guitar. Huge fan of Jane Fonda I practice skeleton and collect artist trading cards.
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