Management

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Advantages of corporation

* Limited Liability. One of the key reasons for forming a corporation is the limited liability protection provided to its owners. Because a corporation is considered aseparate legal entity, the shareholders have limited liability for the corporation's debts. The personal assets of shareholders are not at risk for satisfying corporate debts or liabilities.

* Corporate Tax Treatment. Since a corporation is a separate legal entity, it pays taxes separate and apart from its owners (at least in the typical C corporation). Owners of a corporation only pay taxes on corporate profits paid to them in the form of salaries, bonuses, and dividends. The corporation pays taxes, at the corporate rate, on any profits.

* Attractive Investment. The built-in stock structure of a corporation makes it attractive to investors.

* Capital Incentive. The stock structure also allows corporations to attract key and talented employees by offering an ownership interest in the form of stock options or stock.

* Owner/Employee. A business owner who works in his or her own business may become an employee and thus be eligible for reimbursement or deduction of many types of expenses, including health and life insurance.

* Operational Structure. Corporations have a set management structure. Shareholders are the owners of a corporation, who elect a Board of Directors, which then elects the officers. Other than the election of directors, shareholders do not typically participate in the operations of the corporation. The Board of Directors is responsible for the management of and exercising the rights and responsibilities of a corporation. The Board sets corporate policy and the strategy for the corporation. The Board elects officers, usually a CEO, vice president, treasurer and secretary, to follow the policies set by the Board and manage the corporation on a day-to-day basis. In a small corporation, the lines between the shareholders, Board of Directors, and officers tends to blur because the same people may be serving in all capacities.

* Perpetual Existence. A corporation continues to exist until the shareholders decide to dissolve it or merge with another business.

* Freely Transferable Shares. Shares of corporations are generally freely transferable because as a separate entity, the existence of a corporation is not dependent upon who the owners or investors are at any one time. A corporation continues to exist as a separate entity and is not terminated or dissolved even when

shareholders dies or sell their shares. Shares of corporations are freely transferable unless shareholders have "buy-sell" agreements limiting when and to whom shares may be sold or transferred. Also, securities laws may restrict the transferability of shares.

Disadvantages

* Fees. It costs money to incorporate. There are typically four types of fees, including: a fee to file the articles of incorporation with the secretary of state; a first year franchise tax prepayment; fees for various governmental filings; and attorney fees. But every year tens of thousands of businesses choose to incorporate online without the use of an attorney. For example, basic incorporation before filing fees at a site like LegalZoom.com costs just $99.

* Formalities. The proper corporate formalities of organizing and running a corporation must be followed in order to receive the benefits of being a corporation. * Paperwork. A huge aspect of the corporate formalities that must be followed consists of paperwork. Reports and tax returns must be compiled and filed in a timely fashion; business bank accounts and records must be maintained and kept separate from personal accounts and assets; records must be kept of corporate actions, including meetings of shareholders and Board of Directors; and licenses must be maintained.

* Disclosure of Names of Corporate Officers and Directors. Most states do not require that names of shareholders be a matter of public record; however, many states require that the names and addresses of corporate officers and directors be listed on one or more documents filed with the Secretary of State.

* Dissolution. Since corporations have a perpetual existence, states provide a mechanism for dissolving a corporation and liquidating its assets. Dissolution does not happen automatically. A corporation can be dissolved voluntarily or involuntarily. A corporation's officers and directors are charged with responsibility for dissolving the corporation, including gathering corporate assets, paying creditors and outstanding claims, and distributing remaining assets to shareholders. * Tax Consequences. C corporations have potential double tax consequences-once when the company makes its profit, and a second time when dividends are paid to shareholders. S corporations can mitigate this tax issue.

Different Types of Corporations: Advantages/ Disadvantages 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.

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.

More legal formality

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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.

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.

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.

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The Company Corporation 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.

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

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Protection of personal assets from business debt

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Profits/losses pass through to personal income tax returns of the owners

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Great flexibility in management and organization of the business

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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 a qualified legal and/or 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.

Advantages and Disadvantages of Forming a Corporation

Jun 4, 2011 by Victorino Abrugar at Business, Incorporation

So you want to become a stockholder, CEO or Chairman of the Board of Directors rather than call yourself a proprietor, partner or a plain manager of your own business? A corporation promises a more prestigious form of business. In fact, the biggest, richest and most prominent companies in the world are corporations. Walmart, ExxonMobil, Royal Dutch Shell, Microsoft and Apple, they are all incorporated. But before you decide to incorporate your new business or existing proprietorship or partnership, it is wise to consider first the pros and cons of forming a corporation. So what are the advantages and disadvantages of incorporating a business? The following will give you answers to that question:

Advantages of forming a corporation

1. Owners have limited Liability. A corporation is considered by law as a separate and distinct legal entity. Thus, owners of corporation or shareholders are only indebted to the extent of their interest in the corporation. Corporations have limited liability. This means that their creditors can only run after the assets of the corporation and not the on the personal assets of the stockholders in the settlement of the corporation’s debts or liabilities.

2. It can exist with continuity. The power of succession gives a corporation continuous existence. Unlike a sole proprietorship, where the death of the owner proprietor ceases its existence, the death of a shareholder will not terminate the corporation. The shares of ownership or interest of a corporation can be transferred from one owner to another owner. A corporation continues to exist until the shareholders decide to dissolve it or merge with another business.

3. Shares of ownership are transferable. The shares of stock or interest of a publicly traded corporation can be traded easily though a stockbroker. Shares of corporations are freely transferable except when shareholders have “buy-sell” agreements restricting when and to whom share may be sold or transferred. Securities laws and regulations may also limit the transferability of certain shares. For non-publicly traded corporations, the stock certificate can be transferred or assigned to another owner by executing a deed of assignment of shares of stock.

4. It attracts more investors. Corporations attract investors because of its stock structure, perpetual existence, ownership transferability, and limited liability. Attracting more investors allows a corporation to raise more capital or equity to manage and expand their operations. Furthermore, because of a more regulated form of corporation and the fiduciary duties of its board of directors, it earns more trust and confidence not only from investors, but also from its employees, creditors, suppliers, customers and other outside stakeholders.

5. You can be an employee of your own corporation. Since the corporation is a distinct entity from its owners or shareholders, they can become the corporation’s employees or officers. Thus, they can receive salaries or compensation income aside from the dividends they may receive from the corporation. They can also be eligible for reimbursement or deduction of expenses they incurred related to their employment with the corporation.

6. The corporation pays its own tax. As a separate legal entity, a corporation is also a separate taxpayer from it owners. It has its own Taxpayer Identification Number, and it pays its own taxes, such as corporate income tax, business taxes and withholding taxes. The owners or stockholders pay their own taxes on the compensation and or dividend income they receive from the corporation.

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Disadvantages of forming a corporation

1. Incorporation is costly. Incorporating a business needs to file with the Securities and Exchange Commission (SEC) and may involve a lot of formal and legal papers, such as by laws, articles of incorporation, affidavit and board resolutions. This is sometimes done by getting the service of a corporate attorney or firms which are specialized in incorporating a business. It may also require higher amount of initial or paid-up capital for other types of corporation like financing and lending corporations. Furthermore, the amount of subscribed capital is taxed with documentary stamp tax, which may result to additional expenses to be incurred by the incorporators.

2. Corporations are highly regulated. Ordinary corporations are regulated by the SEC. Special corporations may be required with secondary licenses and are further regulated by other government agencies, such as Bangko Sentral ng Pilipinas (BSP) for financing and lending companies, Commission on Higher Education (CHED) for companies operating secondary schools and Insurance Commission (IC) for insurance companies. Moreover, corporations also need to comply with the quarterly or annual reportorial requirements with the SEC and other agencies requiring those reports for certain types of corporations. This also means that the more compliance it requires, the more paper works and cost it involves. And when there are more to comply, bigger penalties are awaiting to be paid if they are not complied.

3. Limited liability may discourage creditors. The limited liability feature of the corporation can be an advantage for stockholders. However, it can also be a disadvantage when a corporation doesn’t have a good financial condition and performance. Because of the limited liability, a corporation with a low credit score may discourage creditors to lend their money to the corporation.

4. It may result to double taxation. Since the corporation is already taxed on its income, distributing this income to shareholders in the form of dividends may result to double taxation. This is because the dividend income received by the shareholders (natural persons) is also taxed on their personal income tax returns.

5. It is not easy to dissolve. Corporations are difficult to dissolve as it is also difficult to form. Everything is regulated from formation, to operation, and to dissolution. An application for dissolution must be filed with the S.E.C with complete requirements, including tax clearance with the Bureau of Internal Revenue. The liquidation process is also regulated to ensure that the rights of any creditor having a claim against it are not prejudiced.

Choosing the type and form of your business needs a lot of prudent considerations. It may involve assessing your financial resources, taking inherent risks and considering your preparedness. This article only aims to guide you on your way to the right formation of you company or organization. However, the final choice still lies in you. Whatever your decision is and whatever type of business you will form, always remember to do business at your best. To your success!

UConn, SportsNet New York To Announce Partnership August 04, 2010|By The Hartford Courant

Tomorrow morning.

Here's a quick release on it from the school...

UConn Athletic Communications --- August 4, 2010 - UConn/SNY Press Conference

The University of Connecticut Division of Athletics and SportsNet New York (SNY) will hold a press conference on Thursday, August 5 at Rentschler Field to announce a new television partnership in conjunction with the BIG EAST Conference and ESPN Regional Television.

China greets new Pakistan PM Raja Pervez Ashraf; pledges close partnership PTI Jun 25, 2012, 04.51PM IST

BEIJING: China today greeted Pakistan's new Prime Minister Raja Pervez Ashraf, pledging a closer partnership with Pakistan and measures to strengthen their "all-weather friendship".

"As a close and friendly neighbour of Pakistan, we will firmly support its efforts to realise social stability and to boost national development and economic and social progress," Chinese Foreign Ministry spokesman Hong Lei said, congratulating Ashraf on his election.

"We are willing to continue strengthening our all-weather partnership with Pakistan," the spokesman told at a regular press briefing.

Ashraf replaced Yousuf Raza Gilani as Pakistan's Prime Minister after the country's apex court disqualified the latter for his contempt of court conviction. Manekin, Chicago firm join forces in Mid-Atlantic area

Partnership will acquire, develop and manage industrial properties June 12, 2012|By Lorraine Mirabella, The Baltimore Sun

Manekin LLC, a Columbia-based real estate firm, has formed a partnership with Chicago-based Brennan Investment Group to acquire, develop and manage industrial properties in the Mid-Atlantic region.

Manekin, a commercial real estate company with expertise in the Mid-Atlantic, will find and evaluate potential deals, while Brennan will provide capital, the companies said Tuesday.

The alliance allows Manekin to work with a nationally focused company with access to capital at a time when a "wealth of opportunities" exists in the mid-Atlantic region, said Owen Rouse, Manekin senior vice president.

Brennan typically co-invests with private and institutional capital to acquire industrial properties in major metropolitan markets. The company says it has invested in more than 4,000 properties in over 60 cities in the United States, Canada and Europe.

Manekin, founded in 1946, has developed more than 12 million square feet of commercial space in Maryland and elsewhere in the Mid-Atlantic area. Types of Corporations

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C Corporations

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S Corporations

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Non-Profit Corporations C Corporations

The basics of what corporations are is described just above this subheading.

A C Corp is completely separate from the business owner. It pays its own taxes, pays you your salary, and then you pay your taxes. In other words, the business' income does not pass through to your personal income tax reporting's.

This can lead to what is referred to as double taxation (your company pays taxes and so do you on some or all of your company's taxable income). While this may seem unfavorable, C Corps provide the widest range of tools to expand your business.

For example, you can have unlimited shareholders so you can raise as much money as you want. Also, C Corps are taxed differently: for the first $50,000 of taxable income, your business would only pay a tax rate of 15% (when a S-Corp pays at the standard rate).

C corps are a good design for companies that make and deal with a lot of money, have many employees and/or shareholders, have little or no chance of making a loss, and if expansion is likely.

Pros and Cons - C Corporations

S Corporations are basically corporations that have elected to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

The two main points you should know about when it comes to the difference between a C Corp and S Corp is how they are taxed and how many shareholders you can have. There are, of course, other differences; but this article is about giving you the condensed necessary information needed to approach and speak with a professional.

As far as taxes go, S Corps don't pay their own taxes like C Corps do (thus eliminating the double taxation problem). Instead, the taxable income is passed through to the shareholders (the owners).

In other words, if your company made $100,000 taxable income, you would show that income on your personal tax return (whereas a C Corp would first pay taxes on that $100,000 and then pay you your income and you would pay taxes on that income as well).

This form of pass-through taxation is especially favorable if you expect your company to make a loss for the taxable year. In this way, if your company paid more money out than what it made, those losses would pass through to your personal income taxes and can be written off as deductions (whereas if a C Corp had a loss, those losses would not pass through to your personal income tax).

There is one really nice feature of corporations I'd like to mention (both C and S).

As a corporation, you must conduct an annual board of director's meeting to discuss your business. They can even be done more often than once per year. The best part is, this meeting and all expenses incurred because of it is tax deductible (and it can be held anywhere in the world).

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Therefore, many small business owners schedule this meeting around family vacations. By doing this, their plane ticket, gas, food, etc. can all be written off on their taxes. If by chance you decide to go to Disneyland or some other from of entertainment, you can only write a portion of that off . . . but hey, that's better than nothing.

Pros and Cons - S Corporations

Businesses that require a license to practice must be formed as a professional corporation.

For example, the following professionals would have to form a professional corporation: dentists, veterinarians, CPAs, lawyers, doctors, chiropractors, etc. By forming a professional corporation, professionals can limit their personal liability for the malpractice of their associates.

One downside to a professional corporation is that they are taxed a little differently than regular corporations . . . and not necessarily in a good way.

Non-Profit Corporations

Non-profit corporations are exempt from income tax. Such businesses may include: charitable, educational, religious, scientific, or literary organizations. If you wish to form a non-profit corporation, you may want to briefly review Section 501(c) (3) of the Internal Revenue Service Code. These kind of corporations also need to be owned by more than one person and any excess funds (funds remaining after donations have paid for all expenses) must go toward the growth and expansion of business and services.

The LLC business structure has become one of the most favorable business structures around, especially in real estate.

It combines most of the advantages of other business structures while limiting their disadvantages. They work much like S Corps; pass-through taxation, provide liability protection and asset protection for owners, require board meetings, business debts do not show up on personal credit, etc.

There is one big difference between the S Corporation and a LLC which makes the LLC structure advantageous.

The following is probably the BEST example of why you need to take some time and think about what business structure is for you and your business.

In an S Corp, if there are 2 owners then income must be allocated to owners according to their ownership interests. In other words, if John and Bob formed an S Corp, they could structure it so John owns 50% of the business and Bob owns 50% of the business.

If, however, John performed 90% of the work over the year and Bob sat at home and did nothing, Bob would still earn the same amount of money as John (or is suppose to by law).

If instead they formed a LLC instead of an S Corp, then profit and losses can be allocated differently than ownership interests. Therefore, John could earn 90% of the income and leave Bob with the remaining 10% even though Bob owns 50% of the business.

You should consider this business structure using the same reasons to consider an S Corp except you should take into account whether or not you want to have control over who earns what profit regardless of ownership in the business.

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Also, if you own real estate you may want to become familiar with LLCs.

For example, if you owned 5 rental properties and you had no liability protection and one of your tenants hurts themselves on your property, they could sue you. Everything you own could be attached to the judgment. If, however, you placed each of your 5 rental properties in its own LLC then that person could only sue the LLC that owned the property they got hurt on; all your other assets and rentals are insulated from this lawsuit.

Pros and Cons - Limited Liability Company (LLC)

Normally, a real estate investor would set up a separate LLC for each house / rental property they own so that they are protected liability and asset-wise. This can be a huge headache, become expensive, involve lots of paperwork, and create a tax nightmare.

Using the new Series LLC structure, a real estate investor could place all their investment properties under one LLC which stipulates each property is sheltered from the other. Therefore, if someone hurt themselves on property A, they could not attach a judgment to property B (or anything else).Also, the real estate investor could save a lot of time and money by only filing one tax return.A living trust is a legal entity but not quite the same as corporations. You can think of a living trust much like a will. It is a document you place instructions in to pass along your assets after you die. You can also mention certain instructions you wish to happen if you were to become comatose or living solely on life support.A trust can own things just as a corporation can. It can own real estate, cars, jewelry, clothing, etc. Individuals with a lot of assets and/or equity typically look to form living trusts as an added layer of asset protection. Unlike a corporation though, trusts do not pay taxes (in your lifetime). Any profits or losses are passed through to the individual's personal income tax.Living Trusts have one huge advantage over a will. Because a living trust is privatized, it remains out of the courts and thus avoids the possibility of going to probate court if there are any issues that arise when the owner of the trust passes on.

What A Trust Consists Of

A trust consists of the following:

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Grantor - owner of the trust

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Trustee - the person who executes the instructions in the trust after the Grantor dies

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Beneficiaries - the one(s) who receive items/equity from the trust

If you own a business or want to set up a business structure for asset protection, simply contact our partner, BizFilingsto get set up. I hope you can see by reading our articles that we know a thing or two about succeeding in business and knowing which companies can help you achieve success.