Business Planning FAQs

What is the corporate charter?

It is document issued by the secretary of state that indicates when the corporation began its existence.  Think of it has the corporations “birth certificate.”

What is the Difference Between an LLC and a Limited Partnership?

A Limited Partnership consists of at least one general partner and one limited partner. The general partner is potentially liable for all the obligations of the partnership. The limited partner has limited liability. Limited partners may jeopardize their limited liability status if they actively participate in the business of the partnership.

An LLC consists of one or more members which may be individuals, partnerships, limited partnerships, trusts, estates, associations, corporations, other limited liability companies or other business entities. The members of an LLC are afforded limited liability similar to shareholders of a Corporation and have pass-through taxes comparable to a partnership.
 

What factors should be considered in choosing the type of business form for my business?

Although there are many important things to think about when choosing a business form, some of the main considerations include your preference of tax treatment, your plan to capitalize the business, whether you plan to issue stock and trade it publicly, how you plan to structure the management of your business, and issues surrounding the liability of the business owners, among other things.

It is very important to plan your business and to work closely with someone who can help you choose the business form that will meet your needs.

What is the Form 2553?

The 2553 Form, known as the sub chapter S election, is required to be filed with the IRS to get S-corporation status for purposes of federal taxation. Filing this Form with the IRS is used to convert a C-corporation into an S-corporation.

What IRS forms does a co-owned LLC file?

Unless members elect otherwise, a co-owned LLC is considered a partnership. Though the LLC itself does not pay taxes to the Internal Revenue Service, it files Form 1065, U.S. Partnership Return of Income, and issues each member a Schedule K-1 reporting their share of profit and loss. Members file their personal tax returns (usually Form 1040) and report their LLC distributions on Schedule E.