Corporations have existed since before the U.S.A. This longevity and the resulting stability provide great appeal. The separation of economic and voting rights provides further flexibility for those needing it. These benefits are accompanied by increased complexity however. From meetings to additional filings, a corporation comes with its own set of rules.
Allow us to handle the incorporation process and file your yearly reports. We will file all necessary paperwork the state and act as your registered agent. In future years, we will file your periodic report and will keep you compliant.
Colorado Corporations are required to maintain extensive records. You may store the records digitally using our system. This ensures they are always accessible and you stay in compliance. The list includes, but is not limited to:
An S corp is a pass through tax election with the IRS. This means corporate income flows directly onto the owners tax returns. Profits are not taxed twice. There is a limit of 75 shareholders and each owner must be a U.S. resident. Outside of taxes the corporation remains identical.
The corporate veil is the legal concept that a corporation is its own person under the eyes of the law. A corporation may do many of the same things a person can, including entering into contracts and guaranteeing debts. This separation limits the liability owners face to their initial contribution in. Business creditors cannot seize the personal assets of owners. This separation means some companies would do well to form multiple corporations. In this way risky assets and valuable contracts can be separated from each other.
Colorado's Secretary of State only requires you to file a periodic (annual) report and maintain a registered agent. The annual report is simple to file, or you may have us do it to keep your name and signature out of public records.
Only sometimes will forming a corporation be a better choice. Their ability to issue preferred shares, which may have enhanced voting or economic rights, is one advantage. Rarely will small businesses find the increased cost and complexity worthwhile though. Many mistakenly choose a corporation solely for the sub-chapter s taxation election. In fact, limited liability companies may also be taxed as an s-corp in addition to a partnership, disregarded entity or c-corporation.
If you are small enough to consider being a sole-prop, then forming a limited liability company is probably for you. They offer many of the same benefits a corporation does, but are easier to start and maintain. They also provide more flexible taxation among other benefits. Learn more about incorporating in Colorado here and our registered agent service.
If there are multiple owners then you need an agreement. For LLCs this is called an operating agreement and for Corporations these are called the bylaws.
There are simple forms of each where every owner is treated equally. However, in some situations you may want more complex arrangements. For example, perhaps you wish for silent partners who only contribute money, but cannot make decisions or sign on the company’s behalf. In such a case an LLC is a good fit.
On the other hand, perhaps you want multiple classes of ownership. Some of whom have no voting rights, others who receive a guaranteed return before others, and another who does not share in profits until the fifth year. In this case, a Corporation is generally a better fit. Their bylaws and articles allow for much more complex arrangements. However, with such complexity comes additional cost. Leading us to our next question…
The final factor is the amount of money available for the structuring process. Individuals that have a limited budget often opt for an LLC. They provide asset protection and tax benefits along with some flexibility. Those that have money set aside, or more complex needs, can invest in a Corporation.
A corporation will be preferred in situations where a complex shareholder agreement is required. Otherwise, a limited liability company lowers costs and reduces corporate formalities. Unless you have received specific legal or accounting advice otherwise, it is generally preferable to form an llc.
From A to incorporated, we will file everything correctly the first time. We will put our information into the public record rather than yours. We also have a number of resource articles on getting a free business phone, opening a bank account, obtaining your EIN, along with registering foreign corporations and LLC.
We don't complicate things. Everything is handled correctly, the first time, so you have one less thing to worry about. After that, we will only bug you again when your periodic report is due next year. It really is that easy.