ENTITY FORMATION & TRANSACTIONS
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Corporations are probably the most familiar business entity to laymen. They are created by state law and recognized by the IRS as entities separate and distinct from their owners, so long as certain formalities are followed.
They are created upon the registration of articles of incorporation with the Secretary of State or Division of Corporations in the state where the company is to be domiciled. The articles act as a type of constitution for the governance of the company. A corporation's name must be separate and distinct from any other name on the corporate records of the state registry, but this does not bestow trademark rights automatically on the name of the corporation. The corporation also is required to have additional governing documents such as bylaws, stock certificates, minutes of meetings, and a corporate embossing seal. The corporation and its owners (shareholders) must observe formalities of ownership and governance or there is a danger that the company's owners could be held personally liable for the company's acts. For this reason, it is important to have competent legal counsel in the formation and governance of the company.
The company is considered to be formed under Subchapter C of the Internal Revenue Code governing corporate taxation. Such corporations are permitted to have as many shareholders as they wish, retain earnings from one year to the next, and have a fiscal year that starts and ends in any month of the year, but it pays taxes on its own income. Then, when funds or property are distributed to shareholders, these distributions are taxed again. For this reason of double taxation, they are usually reserved for larger companies and special purpose companies. They are not as efficient for passing through losses to the shareholders as other types of entities are.
Most small corporations will elect to be taxed as small business corporations under Subchapter S of the Internal Revenue Code. These corporations are not permitted to have over 75 shareholders, and all shareholders must be human beings or pass-through entities. They are not permitted to carry over retained earnings from one year to the next, and their fiscal tax year must be the calendar year. They provide the same limited liability for their shareholders, but they require the same formalities of the C-corporation, but are often the recommended entity for holding income-generating assets for short periods of time (i.e. less than one year).
We draft joint venture agreements and co-venture agreements between parties, including land trust beneficiaries, whenever they are teaming up to renovate a real estate project or engage in a “one-off” transaction with each other.
We charge $750.00 for an LLC formation, and this will include filing fees to the State Division of Corporations, drafting and filing the articles of organization, drafting an operating agreement, and obtaining a tax identification number on the company’s behalf as your third party designee. We will also prepare for you to file the appropriate forms to elect to be taxed as a Subchapter-S corporation if that is appropriate to the situation (we will not file these on your behalf). Once we receive the above information from you, we can file the LLC.
LLC Formation .............................................................. $750
• Confirmation of name availability
• Certificate of Formation
• Single Member Operating Agreement
• Initial Annual Report
• Organizational Minutes and Resolutions
• Application to IRS for an EIN (if required)
• Owner's Manual for your new LLC
We spend the majority of our time with business planning clients and their tax advisers to determine what business the LLC will be conducting and what structure will be best suited to those activities and tax needs. We then carefully craft an operating agreement that best meets these unique needs of our clients.
A limited partnership is a special type of partnership where there is at least one general partner who is liable personally for the partnership's liabilities and actions. The rest of the partnership interests are owned by limited partners. They are "limited" in that their management powers within the partnership are very limited. The limited partners have no say in the daily operations of the partnership's business. The general partner instead is responsible for the day-to-day operations of the partnership. The limited partners' liability is limited to the amount of their partnership interest only. These entities are used most often as vehicles to raise a large amount of capital from partners who desire to invest in the venture without taking on the liability of the daily operations. They are also often used in estate planning for large intergenerational estates to take advantage of certain tax treatment of the limited partnership interests.
Two owners can form a general partnership on purpose or by accident. A partnership may be deemed to exist whenever two or more people or entities work together and share profits and losses of the venture. No formal written partnership agreement is required, but it is recommended. The partnership will file IRS tax form 1065 each year as an informational return to pass through the losses and income to the partners. Unlike a corporation where the shareholders are not liable personally for the actions of the corporation, partners are liable personally for the actions of the partnership as well as their fellow partners. Because of the liability issues that arise with partnerships, they are generally not the recommended entity of choice anymore. Instead, we are often called upon to advise clients as to how to avoid the accidental creation of partnerships and the liability issues that comes along with them.
You likely already have a self-directed IRA or 401k with a custodian, so you already know the benefits of handling your retirement account investments directly rather than relying on investment advisers. But you may want more speed and control in accessing those funds. A Checkbook Control SDIRA is the answer.
STEPS & TIMING
If your funds are not already held by a self-directed IRA custodian, you will roll over the funds from your current custodian to the new SDIRA custodian. While that is processing, we will:
• Obtain information from you so that we can file the articles of organization to form the company
• Draft the specialized operating agreement for the company that meets IRS guidelines
• Prepared a subscription agreement if your current custodian requires one
• File the SS-4 with the IRS to obtain a new tax identification number for the LLC
You will then:
• Open a bank account in the LLC's name
• Direct the custodian to transfer all funds from the custodian's account to the LLC's account
• Write checks or use a debit card to access the LLC's IRA funds for investment
We currently charge $750.00 to set up any type of Florida LLC. This includes the filing fees. Other states may be higher.
The process takes between 4-6 weeks, depending on the state division of corporations, the IRS, you, and your custodian.