Entity Formation & Incorporation Services
We've taken the struggle out of forming your entity and incorporating your business.
Starting a new business is a rewarding, exciting, and to some extent, a stressful attempt. There are many decisions to be made initially, but one of the most vital things you can never disregard is picking the right business structure for your company.
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The kind of business entity you choose can impact everything from how much you will pay in taxes to how you will establish owner compensation. Don’t risk making the wrong choice; get in touch with Latter Accelerate today for guidance.
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We simplify the incorporation process for entrepreneurs and lead you towards the most suitable structure for your business. We achieve that by helping you evaluate the advantages against the downsides of each entity type, so you may feel certain you have made the correct choice for your new business.
Why Would a Business Want to Incorporate?
Enjoy Tax Advantages:
One of the reasons why businesses would want to incorporate is to enjoy tax benefits. After incorporation, you will be able to avoid taxes on profits, draw a salary, write off losses and expenses, and much more.
Protect Your Personal Assets:
Corporations are deemed legally separate from their owners. Meaning, your personal assets are protected in case of liabilities and judgments.
Build a Stronger Business:
Incorporating means you can easily obtain loans from financial and lending institutions. It means you can sell stocks, attract investors, and hire the right employees. It means you can get permits effortlessly. Essentially, this translates to growing your business.
Deciding on Which Form of Business Entity is Best for You
There are several issues to consider when deciding this, including the following:
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The advantages and disadvantages of each entity
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The type of funding you are eligible for with each business entity
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Your tax bracket
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Possible legal liabilities
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The regulations surrounding each entity
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Liquidation process of each entity
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The above factors may seem a bit overwhelming for some people. However, our professionals understand the nooks and crannies of the various business entities, and they strive to offer advice and suggestions accordingly. From day one, you will walk into your business with a clear grasp of what to expect ahead.
Different types of entities and their benefits and drawbacks
Every entity has certain perks and drawbacks; so, it is advisable to get rid of those that won’t go well with your business goals. Here is a review of some of the most common types of business structures and their pros and cons.
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Sole Proprietorship
A sole proprietorship is often a business venture that is owned by a single individual.
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Pros
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Easy to form and maintain
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Complete control and flexibility
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The owner receives all the profits after tax
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Tax filing is simple
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No corporate formalities such as minutes, meetings, bylaws, etc.
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Cons
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The owner is personally accountable for all of the business’s liabilities and debts
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General lack of continuity. Business longevity relies on the owner’s lifespan
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Requires the owner to perform most of the duties
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Partnership
A partnership is a legal entity owned by two or more persons who engage in business for profit.
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Pros
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They are easy to form and maintain.
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Ability to join forces and raise capital without being accountable to investors
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Partnerships benefit from partners who have complementary skills and talents
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Limited liability partnerships provide some level of liability protection for partners
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They do not pay corporate tax
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Cons
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If the partnership agreement is drafted poorly, there could be potential disputes that may result in costly litigation
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Partners may have personal liability for losses and debts except in the case of limited partnerships and limited liability partnerships
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The Limited Liability Company (LLC)
The LLC is a legal entity that is separate from its members. It is the most popular business structure in the U.S.A.
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Pros
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Owners have limited liability. Meaning they are not legally responsible for the company’s debts and obligations.
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LLCs may opt to be taxed either as a corporation or partnership.
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Offer a lot of flexibility in management options.
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LLCs can outlive their initial founders or members.
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No annual oversight by shareholders
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Flexible profit and loss distribution
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LLCs benefits from members who offer complementary skills
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Cons
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Potential for disorganization if there is no proper agreement
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Disagreements in decision making may cause expensive delays and disruptions
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Annual renewal fees
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More paperwork is required when compared to sole proprietorships or partnerships
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The C Corporation
The LLC is a legal entity that is separate from its members. It is the most popular business structure in the U.S.A.
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Pros
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Perpetual life
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Limited liability of shareholders’ personal assets
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Ability to raise capital via the issuance of stock
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No residency or citizenship requirements
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Ease of transfer of ownership
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Can be established as a subsidiary of another organization rather than individuals
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Unlimited number of shareholders and owners
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Cons
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More expensive to form and maintain
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Require annual meetings, writing of minutes, and other formalities
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Subject to double taxation
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Annual fees can be costly and burdensome for some businesses
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Less flexibility due to regulations governing C Corps
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S Corporation
These are types of corporations that opt for an alternative way to pay annual income taxes. Rather than the S Corp paying the tax itself, the company’s losses, income, credits, and deductions are paid by the owners.
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Pros
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Owners enjoy limited liability for business’ judgments, debts, and other liabilities
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Perpetual life
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Ability to raise capital via stock
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No double taxation and no corporate taxation
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Cons
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Citizenship and residency requirements
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Ownership is limited to 100 shareholders
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More requirements, expensive to create than partnerships and proprietorships
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Need to comply with formalities, like holding board and shareholder meetings and creating bylaws
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You can only have one type of stock
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Nonprofit
Nonprofits are organized for the mutual or public benefit other than generating profit for investors or owners.
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Pros
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Creates a chance of serving others and effecting change
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Separate entity status
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Individual donations are tax exempt
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Perpetual existence
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Personal asset protection
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Access to grants
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Cons
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Expensive to start and maintain
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Strict guidelines for formation, management, and eligible cause
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Strict reporting requirements and ongoing compliance obligations
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Officers and directors do not receive profits
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Get started on your incorporation today!
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With Latter Accelerate Group, all you need is to provide us with some basic details about your business to get going. We will do the groundwork – search and reserve your corporation name, file all your legal paperwork, and follow-up with your state. Even better, after successfully setting your company up, we can prequalify you for $50,000 – $200,000 in funding!
