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Weiss & Moy, P.C. counsels individuals, executives, entrepreneurs and business owners on all entity formation issues, including the formation of corporations and limited liability companies (LLC’s) within Arizona and Nevada. We also advise our clients in the related areas of mergers, asset purchase sales, stock sales, minutes, meetings, contract drafting and contract review, drafting and reviewing lease agreements, and drafting and reviewing licensing agreements. Our attorneys can provide you with the ability to incorporate quickly and efficiently in order to move your business forward. There are many legal issues to consider when forming your new business, and Weiss & Moy, P.C. will ensure that your company’s transaction proceeds smoothly.
Weiss & Moy, P.C. charges a low, flat fee for corporate entity formation, and a highly competitive hourly rate for other types of corporate work.
What is a corporation?
A corporation is a legal entity that has rights similar to those of an individual, but with several important legal and tax advantages. Corporations receive their charter from a state, not the federal government. Each corporation is therefore regulated by the laws of the state where it is incorporated.
The Internal Revenue Service and federal taxation law recognizes two types of corporations for taxation purposes: a C-Corp and an S-Corp.
Advantages of an S-CORP
Most people starting a business will want to incorporate as an S-Corp. With an S-Corp, the corporation does not pay corporate taxes. Instead, the S-Corp’s profits and losses pass directly to the S-Corp’s owners (the individual shareholders), who then declare those profits or losses as part of their personal taxable income. Since most small businesses tend to lose money during the first year as a result of start-up costs, an S-Corp allows the individual to deduct those losses from their personal taxable income. Even if your business is profitable, by incorporating as an S-Corp, you avoid the “double-taxation” of paying taxes both at the corporate and shareholder levels.
Advantages of an C-CORP
A C-Corp is for larger businesses. All publicly traded corporations are C-Corps. A C-Corp has few ownership restrictions, which allows multiple investment sources. Foreign investors, companies and other legal entities are all permissible shareholders. In fact, once an S-Corp has more than 100 shareholders, a foreign investor, or a company as one of its shareholders, then the S-Corp automatically achieves C-Corp status.
Disadvantages of an C-CORP
A C-Corp must pay corporate taxes, similar to the income tax that an individual would pay. However, a C-Corp cannot deduct the dividends it pays to its shareholders. As a result, a “double-taxation” occurs where the profits of a C-Corp are taxed as income both at the corporate level and then at the shareholder level. If a C-Corp suffers a loss, then those losses can be offset against a future profit, but C-Corp losses cannot be claimed on an individual shareholder’s personal taxable income as they could if they were S-Corp losses.
What is an LLC?
LLC stands for “limited liability company,” which combines some of the features of a corporation with those of a partnership. Owners of an LLC are considered “members” not partners or shareholders.
Advantages of an LLC
Members of an LLC have the same type of limited liability protection that shareholders of a corporation possess. In other words, LLC members cannot be held personally liable for the LLC’s debts or obligations unless they have signed a personal guarantee. Unlike an S-Corp, there is no restriction on either the number of members (which is unlimited) or the kind of members (which can be individuals, corporations or other entities). Similar to an S-Corp, however, the profits and/or losses of an LLC can be passed through to individual members, thus avoiding the double taxation of a C-Corp. Unlike a corporation, which is required to have meetings, record resolutions and keep formal minutes, an LLC has no such requirements, making it simpler to operate.
Disadvantages of an LLC
If you have aspirations to take your company public, a traditional corporate structure will make for an easier transition than an LLC. Additionally, the IRS has recently taken the position that all profits of an LLC are subject to FICA and Medicare taxes. Depending on your operating agreement, it can be difficult to make changes to the existing management team or bring in additional investors.
How long do corporations and LLC’s last?
Corporations and LLC’s, while solvent, can last forever. For an Arizona corporation, an annual report fee must be paid. To maintain your Nevada corporation, an annual list of officers and directors must be submitted with the associated fee. Nevada also requires an annual list of members and managers for a Nevada LLC.
For residents of Arizona, or for those whose principal place of business is in Arizona, Weiss & Moy, P.C. can prepare your articles of incorporation to be filed with the Arizona Corporation Commission. Forming an Arizona corporation can limit your liability and provide tax savings.
At Weiss & Moy, P.C., our attorneys can advise as to Arizona law regarding both an S-Corp and a C-corp. Under Arizona law, your Arizona corporation is permitted to issue unlimited authorized shares without having to pay additional annual fees. At Weiss & Moy, P.C., we recognize that it is important to move forward with your business plans as quickly as possible. For this reason, our experienced attorneys can typically prepare your Arizona articles of incorporation within one to two business days.
Arizona LLC Formation
In addition to incorporating, Weiss & Moy, P.C. offers our clients the ability to form a Limited Liability Company (LLC) in Arizona. An Arizona LLC combines many of the advantages of an Arizona corporation with those of an Arizona partnership.
For residents of Arizona, or for those whose principal place of business is in Arizona, Weiss & Moy, P.C. can prepare your LLC’s articles of organization to be filed with the Arizona Corporation Commission. The attorneys at Weiss & Moy, P.C. can also advise you which legal entity best suits your needs: the more structured corporation or the less procedural LLC.
In order to move your business forward as quickly as possible, the attorneys at Weiss & Moy, P.C. can typically prepare your Arizona LLC’s articles of organization within one to two business days.