New Jersey Incorporation and new business advisory

Incorporations

Not all corporations are the same. Depending on the industry that you are in and the nature of your business forming the correct corporation can be critical. We will sit down with you and help you select the best entity.

When you incorporate a business, there are three common business structures entrepreneurs should consider: S corporation, C corporation, and Limited Liability Company (LLC).

About S Corporations

Before you incorporate a business as an S corporation, it is important to understand what having an S corporation means. An S corporation is a standard corporation that has elected a special tax status with the Internal Revenue Service (IRS). The formation requirements for an S corporation are the same as those for a C corporation, wherein formation documents must be filed with the appropriate state agency and the necessary state filing fees paid.
We will not only incorporate your company with the state, but we can also assist you with the filing of your S corporation election with the IRS. Our formation services for S corporations include the preparation of IRS Form 2553. .
One reason so many small business owners choose to elect S corporation status with the IRS is that the S corporation’s special tax status eliminates the possibility of double taxation common to C corporations. With S corporations, a corporate income tax return is filed but no tax is paid at the entity level. Instead, the profits or losses of the corporation are “passed-through” to the shareholders and are reported on their individual tax returns.

 

Advantages of an S Corporation:

  • S corporations avoid the possibility of double taxation on profits
  • Shareholders of an S corporation are typically not personally responsible for the debts and liabilities of the business
  • Ownership of an S corporation is easily transferable through the sale of stock
  • S corporations have unlimited life extending beyond the illness or death of the owners
  • Additional capital can be raised by selling shares of the S corporation’s stock
  • Potential customers may perceive an S corporation as a more professional entity than a sole proprietorship or partnership
  • S corporations are generally audited less frequently than sole proprietorships
  • Certain S corporation business expenses may be tax-deductible
  • S corporations can result in Self-Employment Tax Savings
  • S corporations may provide a number of income and tax savings

 

S corporations are subject to restrictions imposed by the IRS on who can be owners. S corporation owners (shareholders) must meet the following criteria:

  • Number fewer than 100
  • Cannot be non-resident aliens
  • Cannot be C corporations, other S corporations, limited liability companies (LLCs), partnerships or certain trusts.

 

Advantages of a C corporation

  • Shareholders of a C corporation are typically not personally responsible for the debts and liabilities of the business
  • C corporations can have an unlimited number of shareholders
  • Ownership of a C corporation is easily transferable through the sale of stock
  • C corporations have unlimited life extending beyond the illness or death of the owners
  • Additional capital can be raised by selling shares of the C corporation’s stock
  • Potential customers may perceive a C corporation as a more professional entity than a sole proprietorship or partnership
  • C corporations are generally audited less frequently than sole proprietorships
  • Certain C corporation business expenses may be tax-deductible
  • Forming a C corporation can result in self-employment tax savings
  • C corporations may provide a number of income and tax savings

 

Advantages of a Limited Liability Company:

The Limited Liability Company (LLC), is a business entity that offers limited liability protection and pass-through taxation. An LLC can be managed by either the members or by managers.

  • LLCs allow for pass-through taxation
  • Members on an LLC are not typically held personally responsible for the debts and liabilities of the business
  • LLCs generally have no ownership restrictions
  • LLC members have flexibility in structuring the management of the company
  • An LLC does not require as much annual paperwork, or have as many formalities, as a C corporation or an S corporation
  • Written consent of LLC members must be obtained prior to increasing ownership in the company
  • Potential customers may perceive an LLC as a more professional entity than a sole proprietorship or partnership

For your no cost no obligation appointment
call us today at 973-546-2050.