Professional Services-U.S.
1. TYPES OF CORPORATIONS
GENERAL CORPORATION
CLOSE CORPORATION
S CORPORATION
S CORPORATION RESTRICTIONS
LIMITED LIABILITY COMPANY
NON-PROFIT TAX EXEMPT ORGANIZATION
2. BENEFITS OF INCORPORATING
3. PROCEDURE FOR FORMING CORPORATIONS
4. OTHER CORPORATION RELATED SERVICES
5. FAQ'S CONCERNING CORPORATIONS / ORGANIZATIONS
6. COMMERCIAL LAW
7. REAL ESTATE LAW
TYPES OF CORPORATIONS
Anyone who operates a business, alone or with others,
may incorporate. This is also true for anyone or any group engaged in religious,
civil, non-profit or charitable endeavors. You do not have to be a business
giant to be able to have the financial and other benefits of operating a
corporation.
Given the right circumstances, the owner(s) of a
business of any size can benefit from incorporating.
Before deciding which type of corporation best suits your business
needs, we recommend that you consult with your legal or financial
advisors.
The Law Offices of David M Miyoshi can assist you in
determining the best type of corporation to suit your needs.
Click on the title to learn more about the different
types of corporations:
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General Corporation
This is the most common corporate structure. The
corporation is a separate legal entity that is owned by stockholders. A general
corporation may have an unlimited number of stockholders that, due to the
separate legal nature of the corporation, are protected from the creditors of
the business. A stockholder's personal liability is usually limited to the
amount of investment in the corporation and no more.
Advantages
・Owners' personal assets are protected from business
debt and liability
・Corporations have
unlimited life extending beyond the illness or death of the owners
・Tax-free benefits such as insurance, travel, and
retirement plan deductions
・Transfer of
ownership facilitated by sale of stock
・Change of ownership need not affect management
・Easier to raise capital through sale of stocks and
bonds
Disadvantages
More expensive to form than proprietorship or
partnerships. More legal formality
More
state and federal rules and regulations
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Close
Corporation
There are a few minor, but significant, differences
between general corporations and close corporations. In most states where they
are recognized, close corporations are limited to 30 to 50 stockholders. In
addition, many close corporation statutes require that the directors of a close
corporation must first offer the shares to existing stockholders before selling
to new shareholders.
This type of corporation is particularly well suited
for a group of individuals who will own the corporation with some members
actively involved in the management and other members only involved on a limited
or indirect level.
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S
Corporation
With the Tax Reform Act of 1986, the S Corporation
became a highly desirable entity for corporate tax purposes. An S Corporation
is not really a different type of corporation. It is a special tax designation
applied for and granted by the IRS to corporations that have already been
formed. Many entrepreneurs and small business owners are partial to the S
Corporation because it combines many of the advantages of a sole proprietorship,
partnership and the corporate forms of business structure.
S Corporations have the same basic advantages and
disadvantages of general or close corporation with the added benefit of the S
Corporation special tax provisions. When a standard corporation (general, close
or professional) makes a profit, it pays a federal corporate income tax on the
profit. If the company declares a dividend, the shareholders must report the
dividend as personal income and pay more taxes.
S Corporations avoid this "double taxation" (once at
the corporate level and again at the personal level) because all income or loss
is reported only once on the personal tax returns of the shareholders. However,
like standard corporations (and unlike some partnerships), the S Corporation
shareholders are exempt from personal liability for business debt.
S Corporation Restrictions
To elect S Corporation status, your corporation must
meet specific guidelines. As a result of the 1996 Tax Law, which became
effective January 1, 1997, many of these qualifying guidelines have been
changed. A few of these changes are noted below:
Prior to the 1996 Tax Law, the maximum number of
shareholders was 35. The maximum number of shareholders for an S Corporation
has been increased to 75.
Previously, S Corporation ownership was limited to
individuals, estates, and certain trusts. Under the new law, stock of an S
Corporation may be held by a new "electing small business trust." All
beneficiaries of the trust must be individuals or estates, except that
charitable organizations may hold limited interests. Interests in the trust
must be acquired by gift or bequest -- not by purchase. Each potential current
beneficiary of the trust is counted towards the 75 shareholder limit on S
Corporation shareholders.
S Corporations are now allowed to own 80 percent or
more of the stock of a regular C corporation, which may elect to file a
consolidated return with other affiliated regular C corporations. The S
Corporation itself may not join in that election. In addition, an S Corporation
is now allowed to own a "qualified subchapter S subsidiary." The parent S
Corporation must own 100 percent of the stock of the subsidiary.
Qualified retirement plans or Section 50 1(c)(3)
charitable organizations may now be shareholders in S Corporations.
All S Corporations must have shareholders who are
citizens or residents of the United States. Nonresident aliens cannot be
shareholders.
S Corporations may only issue one class of
stock.
No more than 25 percent of the gross corporate income
may be derived from passive income.
An S Corporation can generally provide employee
benefits and deferred compensation plans.
S Corporations eliminate the problems faced by
standard corporations whose shareholder-employees might be subject to IRS claims
of excessive compensation.
Not all domestic general business corporations are
eligible for S Corporation status. These exclusions include:
- A financial institution that is a bank;
- An insurance company taxed under Subchapter
L;
- Domestic International Sales Corporation (DISC); or
- Certain affiliated groups of corporations.
Keep in mind, these lists of qualifying S
Corporation aspects are not all-inclusive. In addition, there are specific
circumstances in which an S Corporation may owe income tax. For more detailed
information about these changes and other aspects regarding S Corporation
status, contact your accountant, attorney or local IRS office.
How to File as an S Corporation
To become an S Corporation, you must know the
mechanics of filing for this special tax status. Your first step is to form a
general, close or professional corporation in the state of your choice. Second,
you must obtain the formal consent of the corporation's shareholders. This
consent should be noted in the corporation's minutes. Once the filing is
approved, your company must complete Form 2553, Election by a Small Business
Corporation. This form must be filed with the appropriate IRS office for your
region Please consult the IRS' instructions for Form 2553 to determine your
proper deadline for completing and submitting this form.
The Law Offices of David M Miyoshi can assist you in
preparing and submitting the IRS Form 2553 as part of your incorporating
process. Please see our online order form for additional details.
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Limited Liability Company (LLC)
LLCs have long been a traditional form of business
structure in Europe and Latin America. LLCs were first introduced in the United
States by the state of Wyoming in 1977 and authorized for pass-through taxation
(similar to partnerships and S Corporations) by the IRS in 1988. With the
recent inclusion of Hawaii, all 50 states and Washington, D.C. have now adopted
some form of LLC legislation for both domestic and foreign (out of state)
limited liability companies.
Many business professionals believe LLCs present a
superior alternative to corporations and partnerships because LLCs combine many
of the advantages of both. With an LLC, the owners can have the corporate
liability protection for their personal assets from business debt as well as the
tax advantages of partnerships or S Corporations. It is similar to an S
Corporation without the IRS' restrictions.
Advantages
・Protection of person assets from business
debt
・Profits/losses pass through to
personal income tax returns of the owners
・Great flexibility in management and organization of the
business
・LLCs do not have the ownership
restrictions of S Corporations making them ideal business structures for foreign
investors
Disadvantages
LLCs often have a limited life (not to exceed 30 years
in many states) Some states require at least 2 members to form an LLC, and LLCs
are not corporations and therefore do not have stock -- and the benefits of
stock ownership and sales.
As with the S Corporation listing, these lists are not
inclusive. For more detailed information, please be sure to speak with the Law
offices of David M Miyoshi or your financial advisor.
Important Note Regarding the Federal Taxation of
LLCs:
Before January 1, 1997, the Internal Revenue Service
determined whether a limited liability company would be taxed "like a
partnership" or "like a corporation" by analyzing its legal structure or by
requiring the members to elect the tax status on a special form. Effective
January 1, 1997, the IRS has simplified this process.
Pursuant to these new IRS regulations, if a limited
liability company has satisfied IRS requirements, it can be treated as a
partnership for federal tax purposes. As such, LLCs are required to file the
same federal tax forms as partnerships and take advantage of the same benefits. However, this is still a highly technical area, and if you require further
information, it is recommended that you communicate with the Internal Revenue
Service or consult a competent professional such as a qualified tax accountant
or attorney.
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Non-Profit
Tax Exempt Organization
A non profit tax exempt organization is generally an organization formed
for charitable and other non profit purposes. Such an organization has
substantial tax benefits under both U.S. Federal and state regulations. The
charitable purposes of these organizations would include relief of the poor and
distressed or of the underprivileged; advancement of religion; advancement of
education or science; erection or maintenance of public buildings, monuments, or
works; lessening of the burdens of Government; and promotion of social welfare
by organizations designed to accomplish any of the above purposes, or (i) to
lessen neighborhood tensions; (ii) to eliminate prejudice and discrimination;
(iii) to defend human and civil rights; or (iv) to combat community
deterioration and juvenile delinquency. The focus of organization's purpose must
be to benefit the community or society as a whole, not just the organization's
members and their families or other select individuals. Enumerated purposes
under U.S. Code §501(c)(3) include: religious, charitable, scientific, testing
for public safety, literary, or educational purposes, or to foster national or
international amateur sports competition (but only if no part of its activities
involve the provision of athletic facilities or equipment), or for the
prevention of cruelty to children or animals.
Advantages
・No
Federal or state income taxes
・Ability to
raise large amounts of funds
・Same
advantages as regular corporations
Disadvantages
More expensive to form than proprietorship or
partnerships. More legal formality
Much
more Federal and state rules and regulations
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Order now by calling our Incorporation Specialists at
213 624-8697 or by using our online order form.
BENEFITS OF INCORPORATING
Limited Liability
When a corporation is formed, a new business entity is created
which is separate and apart from its owners in the eyes of the law. This means
that the owners or shareholders of a corporation can shield their personal
assets from business debts or other claims against the corporation. Neither the
house, the car, nor any other personal holdings of the individual owners are
exposed to risk. In most cases, the owners risk only their capital investment in
the corporation.
Tax Advantages
A
corporation offers major tax advantages over the structures such as sole
proprietorships or partnerships. In a corporation, health insurance, travel and
entertainment expenses can often be 100% tax deductible for the owners. The tax
rate for corporations is often lower than for individuals. Retirement plans,
profit sharing and stock option plans can be established to lower the
corporations' taxable income, and these plans can be structured in a way which
is beneficial to the owners' personal finances.
Ease in Raising Capital
Corporations can raise capital more easily than other business
structures through the issuance and sale of stock. Investors are attracted to
corporations for many of the same reasons mentioned above, especially limited
liability. Banks and venture capitalists are often wary of an investment which
could make them liable for lawsuits and damages against the company, but
investment in a corporation does not usually carry this
responsibility.
Ease of Transfer of Ownership
Ownership of a corporation is determined through the stock
holdings. Ownership interests may be transferred easily, without disrupting the
activities of the business, through the transfer and sale of stock.
Prestige and Credibility
If your company does not have a professional image, it doesn't
stand a chance to compete. When a company is incorporated, it sends a signal to
customers, investors and competitors that its owners are serious and
professional. Investors will be interested, customers will be at ease and
competitors will be nervous.
Anonymity
In a
sole proprietorship or partnership, the owner of the business is publicly
recorded as such. However, corporations can protect their owners from publicity.
Only the officers and in some cases the directors of a corporation are a matter
of public record; not the stockholders. Therefore, incorporation is an option
for an individual or group which wants to run a small business without public
knowledge of their involvement. Anonymity can also be an attractive feature for
potential investors.
Perpetual Existence
A corporation is the most enduring of all business structures. If
a sole proprietor or partner in a partnership should die, the business will most
likely end or become mired in legal entanglements. Because a corporation is a
business entity separate and apart from its stockholders, it outlives the
individuals who own it.
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PROCEDURE FOR FORMING CORPORATION
1. Choose the Type of Business Structure
The most common types of corporate or business
entities are:
General Business
Corporation, Subchapter S Corporation and Limited Liability Company. If these do
not suit your needs, call our Law Office and we will be happy to discuss the
structure and requirements of other entities, such as the close corporation or
the non-profit corporation.
2. Choose a State of Incorporation
Our Law Office can incorporate your company in any
state, regardless of where you plan to conduct business. There is a filing fee
for forming a corporation or a Limited Liability Company in each state. Some
states have particularly attractive laws for corporations, and our Law Office
can provide you with information on the advantages of incorporating in certain
states.
3. Choose a Name For Your Company
The name you choose must include one of the following
endings: Incorporated, Corporation, Company, Limited or Association. An
abbreviation of any of these words is also acceptable. In order for your
corporate name to be accepted by the Secretary of State, it must not be the
same, or so similar as to cause confusion, as any existing business in the same
state. Because so many new businesses are formed every day, it is important that
you reserve your name as soon as possible. Our Law Office can check on the
availability of your name and, if available, reserve it in the state of your
choice for 60 days while you are finalizing your incorporation plans.
4. Choose a Registered Agent
Every state requires that corporations and LLCs designate an Agent
to receive important notices and tax information from that state, as well as to
receive suit papers. The Registered Agent must be located at a street address in
that state. If you live in the state in which you are incorporating, you can
save a great deal of money by serving as your own Registered Agent. If not, Our
Law Office and our network of affiliates are able to serve as your Registered
Agent in any state.
5. Fill Out the Company Information Form
Complete the Company Information Form. Your Articles
of Incorporation will be sent to the Secretary of State the same day. In many
states, your corporate charter will be issued within 24 hours. Other states'
processing time is up to four weeks. Our Law Office will forward your
certificate of incorporation when it is issued by the state.
6. Hold the Appropriate Meetings
After your corporate charter has been issued by the
Secretary of State, your company must hold the first Board of Directors meeting,
during which the directors and officers are elected or appointed, bylaws are
adopted and other corporate business is addressed.
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OTHER CORPORATION RELATED SERVICES
In addition to forming your corporation, we are able
to assist your company in several other areas, efficiently and
inexpensively.
Registered Agent Services
We have affiliates throughout the U.S. who can serve
as Registered Agent in every U.S. jurisdiction. Contact us through email to
inquire of our service fees in your state.
Qualification
We can prepare and file all of the necessary
documentation to qualify your corporation or Limited Liability Company to do
business in any state.
Federal Tax Identification Number
Every entity in the U.S. must have a Federal Tax
Identification Number. We can save you tedium and paperwork by applying to the
IRS for the number on your behalf.
Subchapter S Election
In order to form a Subchapter S Corporation, you must
file an application with the IRS within 75 days of forming your General or Close
Corporation. We can complete and file the application with the IRS on your
behalf.
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FAQs
CONCERNING CORPORATIONS / ORGANIZATIONS
1. What does the
Law Offices of David M Miyoshi do?
2. What are the benefits to
incorporating?
3. What are
the disadvantages to incorporating?
4. Where should I incorporate?
5. What are the
advantages of a Delaware or Nevada corporation?
6. Can my Delaware
Corporation do business in my home state and states other than Delaware?
7. Are there any
special requirements for selecting a corporate name?
8. How do I find out if
my preferred company name is available?
9. Is there a
minimum capital requirement to start a corporation?
10. How many people do I
need to incorporate?
11. How long will it
take before my business is officially incorporated?
12. When will I receive my
corporate kit?
13.
When will I receive my Articles of Incorporation?
14. What is a Registered Agent?
15. What is a
Corporate Kit and do I need one?
16. Can I keep the
same bank account, or do I need to open a new one once I'm incorporated?
17. Can I keep or
transfer my current tax ID number?
18. Which Types of Business
Entities Are Available?
19. What Is the Advantage
of the LLC Over the Corporation?
20. What Is the
Difference Between an LLC and a Subchapter S Corporation?
21. If I Incorporate in One
State, Can I Do Business in Others?
22. What Happens After I
Incorporate?
23. What Is
a Federal Tax ID Number?
24. What Type of Stock
Should My Corporation Issue? Common Stock or Preferred Stock?
25. Par Value or No Par Value?
26. What can the law
offices do to help me file an international corporation?
27.
What are the facts about Non-Profit Tax Exempt Organizations?
1. What does the Law
Offices of David M Miyoshi do?
The Law Offices of David M Miyoshi provides full incorporation services both
in the US and in offshore jurisdictions. We offer a wide range of services
including:
・Name search and reservation
・Preparation and filing of Articles of
Incorporation in all 50 states
・Formation of Limited Liability Companies in
all 50 states
・All documents in Japanese and English
・Registered Agent
office and address
・Receive and forward service of process
・Forward
official federal and state mail
・Corporate organizers, which include:
Corporate minute book, seal and stock certificates
・IRS form SS-4 for your
Tax ID number
・File qualification documents in all 50 states
・U.S.
trademark and patent searches
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2. What are the benefits to
incorporating?
The benefits to incorporating are:
Limited Liability
When a corporation is formed, a new business entity is
created which is separate and apart from its owners in the eyes of the law.
This means that the owners or shareholders of a corporation can shield their
personal assets from business debts or other claims against the corporation.
Neither the house, the car, nor any other personal holdings of the individual
owners are exposed to risk. In most cases, the owners risk only their capital
investment in the corporation.
Tax Advantages
A corporation offers major tax advantages over the
structures such as sole proprietorships or partnerships. In a corporation,
health insurance, travel and entertainment expenses can often be 100% tax
deductible for the owners. The tax rate for corporations is often lower than for
individuals. Retirement plans, profit sharing and stock option plans can be
established to lower the corporations' taxable income, and these plans can be
structured in a way which is beneficial to the owners' personal finances.
Ease in Raising Capital
Corporations can raise capital more easily than
other business structures through the issuance and sale of stock. Investors are
attracted to corporations for many of the same reasons mentioned
above--especially limited liability. Banks and venture capitalists are often
wary of an investment which could make them liable for lawsuits and damages
against the company, but investment in a corporation does not usually carry this
responsibility.
Ease of Transfer of Ownership
Ownership of a corporation is determined
through the stock holdings. Ownership interests may be transferred easily,
without disrupting the activities of the business, through the transfer and sale
of stock.
Prestige and Credibility
If your company does not have a professional
image, it doesn't stand a chance to compete. When a company is incorpoe2.jd, it
sends a signal to customers, investors and competitors that its owners are
serious and professional. Investors will be interested, customers will be at
ease and competitors will be nervous.
Anonymity
In a sole proprietorship or partnership, the owner of the
business is publicly recorded as such. However, corporations can protect their
owners from publicity. Only the officers and in some cases the directors of a
corporation are a matter of public record; not the stockholders. Therefore,
incorporation is an option for an individual or group which wants to run a small
business without public knowledge of their involvement. Anonymity can also be
an attractive feature for potential investors.
Perpetual Existence
A corporation is the most enduring of all business
structures. If a sole proprietor or partner in a partnership should die, the
business will most likely end or become mired in legal entanglements. Because a
corporation is a business entity separate and apart from its stockholders, it
outlives the individuals who own it.
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3. What are the disadvantages
to incorporating?
The disadvantages to incorporating are:
Record Keeping
Maintaining a corporation requires more paperwork and
record keeping than sole proprietorships. Each individual state has its own
legal procedures and regulations for forming and maintaining a corporation in
good standing.
Costs
Also, it is usually more costly to set up a corporation than any of
the other major business structures. If you incorporate with a lawyer there are
lawyer fees but with that you get the personal guidance and attention to make
sure it is done correctly.
Not enough profit
If the profit from the business is not significant
there may not be enough income to take advantage of the tax and other benefits
of a corporation.
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4. Where should I incorporate?
This questions deals with legal and financial issues. It is not the purpose
of this web page to provide legal or tax advice. Before deciding to form a
corporation, you should consult with an attorney such as the Law Offices of
David M Miyoshi or an accountant to determine if a corporate structure is best
for your business, and in which state to form your corporation. Some
accountants and lawyers recommend forming a Delaware corporation in all cases. It is true that up until a few years ago, Delaware corporations did have
significant tax and other advantages. This is no longer as true as it used to
be. Nor may it be advantageous to form a corporation in Nevada, Wyoming or any
other state in America if you do not conduct business there. The best advice
may be to form a corporation in the state where you plan to conduct business. It will be far less complicated and more cost-effective in the long run. Listed
below are some of the reasons why Delaware attracts both large and small
businesses:
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5. What are
the advantages of a Delaware or Nevada corporation?
Anyone may form a corporation in Delaware without ever having to visit the
state. Delaware has kept its fees low and is one of the friendliest states to
corporations. Indeed, over 50% of all companies listed on the New York Stock
Exchange are Delaware Corporations.
・Names and addresses of initial directors need not be listed in public
records.
・The cost to form a Delaware corporation is among the lowest in the
nation. The annual $50 Franchise Tax compares favorably with that of most other
states.
・Delaware maintains a separate court system for business, called the
"Court of Chancery." If legal matters arise involving a trial in Delaware, there
is an established record of business decisions.
・No minimum capital is
required to organize the corporation and there is no need to have a bank account
in Delaware.
・Just one person can hold all the offices of the corporation:
President, Vice President, Secretary and Treasurer.
・There is no state
corporate income tax on Delaware corporations that do not operate within the
state.
・Shares of stock owned by persons outside of Delaware are not subject
to Delaware personal income tax.
・There is no Delaware inheritance tax
levied on stock held by non-residents.
Nevada is becoming increasingly friendly to corporations with its privacy and
liability protection status. Numerous companies are relocating their business
entities to Nevada in order to receive the numerous tax benefits. Listed below
are some of the reasons why Nevada is attracting more businesses each day:
・No state corporate tax on profits
・No state annual franchise tax
・No
personal income tax
・Stockholders are not public record which permits
complete anonymity
・Just one person can hold all the offices of the
corporation: President, Vice President, Secretary and Treasurer.
・Stockholders, directors and officers need not be residents of Nevada
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6. Can my
Delaware corporation do business in my home state and other states besides
Delaware?
Yes. In fact, nearly half of the corporations listed on the New York Stock
Exchange are Delaware corporations. Many of these corporations conduct business
throughout the U.S. and abroad. They must, of course, conform to the laws of
any jurisdiction they enter. Many states require that any foreign (out of
state) corporation qualify to do business in their state. The Law Offices of
David M Miyoshi can assist you in qualifying your corporation or LLC in any
state you choose.
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7. Are there any
special requirements for selecting a corporate name?
Yes. The corporate name you choose must contain a valid corporate indicator
for the state in which you are incorporating. Most every state will accept one
of the following identifiers or a suitable abbreviation: Incorporated,
Corporation, Company, Limited or Co., Ltd.. The regulations affecting
corporations do vary from state to state. In addition, your corporate name must
not match or be too similar to the name of an existing company registered in
your desired state. The Law Offices of David M Miyoshi can assist you in
determining an acceptable corporate indicator for your state.
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8. How do I find
out if my preferred corporate name is available?
The Law Offices of David m Miyoshi can search and reserve a name for you
within 24-48 hours for most states. Please note, many states require that your
corporate name be unique and not deceptively similar to the name of an existing
corporation in that state. For this and to ensure your filing is completed as
quickly as possible, it is a good idea to submit at least one alternate name
with your order.
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9. Is there
a minimum capital requirement to start a corporation?
In most states, the only capital required to start your corporation or LLC is
the state filing fee. For instance, to form a Delaware corporation, you only
need to pay the filing fees of $74 and the attorney's fees.
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10. How many
people do I need to incorporate?
Most states require there be at least one director for a corporation and two
for an LLC, although the actual number varies from state to state.
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11. How long
will it take before my business is officially incorporated?
Your corporate documents in most other states will be filed with the
appropriate state agency within just 2-3 days. As soon as the official
documents are released by the state, we forward them to you via your desired
method of delivery.
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12. When will I
receive my corporate kit?
Your corporate kit will be shipped to you via express courier after official
verification of filing has been returned by your state. This time frame varies
from state to state, but in most cases, you will receive your corporate kit
within 5-7 business days from the date of incorporation. Your copy of the filed
Articles of Incorporation arrive separately.
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13. When will I receive
my Articles of Incorporation?
Your copy of the filed Articles of Incorporation will arrive separately from
the corporate kit. Generally, we can file your Articles of Incorporation and
have them in your hands in as little as I 0 business days. Foreign business
formations require a somewhat longer time to complete. If you select our
Express service, within just 24 hours of receiving documentation from your state
of incorporation we will send you the filed Articles of Incorporation and your
selected Corporate Kit by overnight delivery.
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14. What is a Registered Agent?
Most states require that corporations maintain a designated person or entity
(a resident of the state of incorporation) to be responsible for receiving vital
legal and tax documents on behalf of the corporation. An "agent" of the
corporation "registered" with the particular state of incorporation provides
this service - thus the term "Registered Agent." Service performed by the
Registered Agent include:
・Provide a local address for service of process in the state of
incorporation.
・Forward official state and federal mail.
・Forward state
franchise tax or annual reports when required.
・Provide additional buffer
between the state and your business allowing you greater personal anonymity.
・All service of process is sent to you promptly for your immediate
attention.
・Our fees for hiring a Registered Agent vary with the state or
international jurisdiction.
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15. What is a
Corporate Kit and do I need one?
When you form your new corporation, it is essential to keep accurate
records. Our Corporate Kits are designed and intended to make your day-to-day
corporate procedures an easy task. Here is what's included in the kit:
・Corporate seal
・Minute book
・20 stock
certificates imprinted with corporate name
・Stock transfer ledger
・Sample forms for minutes and bylaws
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16. Can I
keep the same bank account or do I need to open a new one once I'm incorporated?
It is necessary to open a new bank account for your new entity. Do not
commingle cash. Always operate your corporation as a separate entity distinct
from yourself in every respect. By using the same bank account for personal and
corporate purposes, you pierce your corporate veil and allow creditors to
challenge the validity of your corporation and attack your personal assets.
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17. Can I keep or
transfer my current tax ID number?
No. Your Employer Identification Number is like a social security number. Just as you would obtain a separate Social Security Number for different people,
you must have a different EIN for each new company.
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18. Which Types of
Business Entities Are Available?
There are several types of business entities which offer the benefits of
incorporation. We can explain the features of each one and set up the entity
best suited to your business needs. The following are the most widely used
business structures:
General Business Corporation
Also known as the C corporation, this is the most formal corporate structure
and is commonly used for both large and small companies. The stockholders are
protected through limited liability and risk only their capital investment in
the corporation. The General Business or C corporation can have an unlimited
number of stockholders and can raise capital by selling stock on public
exchanges. The General Business corporation also offers perpetual existence, or
life beyond that of its original owners.
Subchapter S Corporation
A corporation with Subchapter S status avoids the burden of federal corporate
income tax. The IRS allows any tax obligations on the corporation's income tax
to be "passed through" to the personal income tax returns of the stockholders.
The stockholders, however, still enjoy limited liability. In order to elect
Subchapter S status, one must form a General Business corporation and then apply
to the IRS for S status within 75 days of incorporation. S corporations must be
formed in the United States and all stockholders must be U.S. citizens.
Limited Liability Company (LLC)
The LLC is an alternative business entity that offers many of the same
advantages as the corporation. Owners of the LLC are called members. Members
enjoy both the limited liability of the corporation and the tax advantages of
the partnership or S Corporation, in that LLCs do not pay federal income tax.
All business income or losses are reported on the personal income tax returns of
the members. There is no double taxation on the company's income. This structure
is
particularly beneficial to family businesses, professional organizations,
non-U.S. residents and foreign businesses. In most states, two members are
required in order to form an LLC. Also, the LLC does not have perpetual
existence, with a limited life of up to 30 years in most states.
In addition to these three most common business structures, there are
alternatives for new companies, such as the close corporation or the non-profit
corporation. We are available to discuss any type of corporate structure and
answer any of your questions as you determine which type of entity is best for
you.
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19. What Is the
Advantage of the LLC Over the Corporation?
A corporation is taxed at the corporate level and then profits are
distributed to the owners. The profits are then taxed as the owners' personal
income. LLC income is only taxed once, because income or loss is passed through
to the individual income tax returns of the owners. LLCs are also easy to form
and require little record keeping. The Articles of Organization are simple and
members write the Operating Agreement which determines the policies of the
company and can be modified by the members at any time, without amending the
Articles.
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20. What Is the
Difference Between an LLC and a Subchapter S Corporation?
Both structures offer limited liability and "pass-through" taxation, but the
LLC is much more flexible. In an S corporation, the owner of 25% of the stock is
responsible for 25% of the taxes owed on the corporation's income. LLC
members, however, can divide income and tax liability however they wish,
regardless of their percentage of ownership.
Furthermore, Subchapter S corporations are limited to 75 shareholders and
U.S. citizenship is required for ownership. LLCs are not restricted by either of
these requirements.
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21. If I
Incorporate in One State, Can I Do Business in Others?
Yes! No matter what state you incorporate in, you can formally qualify to do
business in other states. Many small businesses incorporate in Delaware or
Nevada, but conduct all of their business in another state. In order to qualify
to do business in another state, your corporation must apply for a Certificate
of Authority to Transact Business in that state, pay the state filing fees, and
appoint a Registered Agent for that state. We can prepare and file your
paperwork for any state and serve as Registered Agent through our affiliates.
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22. What Happens After I
Incorporate?
After your Articles of Incorporation are filed with the state, you must hold
your first Board of Directors meeting. At this meeting, you issue stock to the
stockholders. If you have a Corporate Kit, you will be able to distribute the
actual stock certificates. Then the Board of Directors will appoint the officers
of the corporation. Officers are the President, Vice President, Secretary and
Treasurer, who manage the daily operation of the company. In some states, one
person can serve as all of the directors and officers.
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23. What Is a Federal Tax
ID Number?
Most corporations must obtain a federal tax identification number or IRS
Employer Identification Number (EIN). This number is required if the company
plans to open a corporate bank account or hire employees. Many documents and tax
returns require an EIN. In order to obtain the number, your corporation must
file Form #SS-4 with the IRS. We can handle this filing for you and obtain the
number for you in a few business days.
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24. What Type of
Stock Should My Corporation Issue? Common Stock or Preferred Stock?
The vast majority of corporations issue only common stock. Common stock
carries voting rights of one vote per share. Preferred stock usually does not
carry voting rights, but preferred stockholders are entitled to receive
dividends before holders of common stock.
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25. Par Value or No Par Value?
All classes of stock can have a par value, which is a set value per share
under which it should not be sold. Often a stock is sold for more than its par
value. If a stock has no par, it can be sold for any price. This gives more
flexibility to the corporation when it is trying to raise capital. About 95% of
corporations issue stock with no par value.
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26. What can
The Law Offices of David M Miyoshi do to kelp me file an international
corporation (or bank)?
The Law Offices of David M Miyoshi has developed strategic alliances with
specialized international incorporators throughout the world enabling us to file
your international company in almost any jurisdiction. Our international
network offers you the most cost efficient and expedient services available,
including the availability of ready-made shelf companies in major worldwide
jurisdictions.
We also provide other special international services including notarization,
apostilles and translation services. If you require an offshore or
international company, The Law Offices of David M Miyoshi can assist you. Please be aware that most international requests will take longer than 24 hours
to complete and may require additional information to register in the country of
your choice.
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27. What are
the facts about Non-Profit Tax Exempt Organizations?
There are some 1.1 million nonprofits currently in the United States. The
growth rate for nonprofits is approximately 3% a year and within the next five
years nonprofits will total more than 1.4 million organizations. The nonprofit
market is America's third largest business, generating more than $380 billion in
purchases of goods and services. Nonprofits represent about 10% of all
businesses in the U.S. Of the total number of charities in the country, there
are 599,745 Sec. 501(c)(3) organizations, which actively raise $124 billion a
year in charitable contributions from individuals, corporations and foundations.
Of these organizations, approximately 2,700 raise more than $50 million a year.
These same 501(c)(3) groups spend $200 billion annually to purchase goods and
services each year. 47% of nonprofits use the mails to raise money. Appeals from
charities account for one out of every four pieces of mail moving through the
U.S. Postal Service. Nonprofit bulk mail constitutes one-third of all bulk mail
delivered by the Post Office.
Of the 599,745 501(c)(3) organizations that raise money, there are
approximately 2,700 that raise more than $50 million a year. These organizations
tend to be colleges and universities, hospitals, large health and social service
agencies (such as American Lung and American Red Cross) and religious
organizations (Catholic Charities, Salvation Army). These organizations
have various staff functions for each type of fundraising (annual giving,
planned gifts, capital campaigns, direct mail) and purchasing power is
decentralized. Organizations that raise $10-$49.9 million number about 6,600 and
include hospitals, educational organizations and social welfare agencies. These
organizations typically have various staffs to handle different development
functions, and purchasing power is decentralized.
Some 6,200 organizations
raise $5-$9.9 million and include more social and human service organizations.
They include education and health-related groups, and purchasing power is more
centralized with the development office usually having purchasing power for the
various development functions.
Further down the revenue scale the numbers increase dramatically. There are
more than 42,500 organizations that raise $1 -$4.9 million a year. These include
education, health, religious and more social welfare organizations. Purchasing
power is much more centralized, with the development office having complete say
in goods and services purchased. Usually board approval is required for capital
purchases above $5,000 for items not budgeted for outlays.
More than 68,000 organizations raise between $500,000 and $999,999, and there
are more social service organizations in this group. Development office function
is often included in the executive director's job responsibilities, and
purchasing tends to be total centralized through one or two people.
There are more than 275,500 organizations that raise less than $500,000, and
these agencies tend to have smaller budgets. The executive director is also
responsible for raising money, and board approval is required for expenditures
of more than $2,500.
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COMMERCIAL
LAW
Our law office can provide negotiation and
drafting services in the following types of commercial law
transactions:
Mergers & Acquisitions
Resolving Shareholder disputes (majority and
minority shareholders)
Director and
Officer Liability issues
Partnership
disputes
Employment
disputes
Contract drafting
Contract review
Contract negotiation
Breach of contract
Business Purchase
Business
Sale
Commercial Leases - drafting,
review, negotiation
Trademarks --
searching, filing, litigation
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REAL
ESTATE LAW
Our law offices can provide negotiation and drafting
services in the following types of real estate transactions:
Nondisclosure suits
Real Estate Appeals
Commission disputes
Title Disputes
Property Exchanges
Property line disputes
Boundary disputes
General easements
Prescriptive Easements
Adverse Possession
Commercial Leases - Drafting, Review, and
Negotiation
Residential Leases - Drafting, Review, and Negotiation
Unlawful Detainer actions, 3-day Notices, 30-day Notices
Residential evictions
All Landlord matters
Commercial property transactions
Property Purchase or Sale document review
Lender Negotiations
Eminent Domain
Inverse Condemnation
Homeowner's Associations
Foreclosures
Liens
Deeds
Trust deeds
Options
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