An entity is a business organized according to state law to limit the liability of the owners. Entities can be corporations, limited-liability companies (LLCs) and limited partnerships (LPs). All provide much greater asset protection when compared to a sole proprietorship or general partnership.

A corporation is a separate legal entity formed by individuals and/or other business entities for the benefit of limited liability, asset protection, tax savings and ease of ownership. The owners of a corporation are shareholders, the management is known as officers and directors.

There are many tax benefits to using a corporation, LLC or LP. Many business expenses are easily written off, and in the right structure, pre-tax dollars can be used for valuable benefits packages. As well, the risk of an IRS audit is lower with business entities.

If structured properly, the liability of the owner is limited to the amount of their investment in the entity. Thus, the personal assets of the owner will be protected against any business claimants. If you sign a personal guarantee, however, you will be personally responsible for that obligation. This personal responsibility is only to the party you contracted with and does not extend to others.

A C Corporation is a type of business entity that is legally separate from its owners. It offers strong liability protection, meaning the owners’ personal assets are generally protected from business debts and lawsuits.
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C Corporations are taxed separately from their owners. This means the business pays taxes on its profits, and then shareholders pay taxes again if those profits are distributed as dividends—this is called “double taxation.”

An S Corporation is a type of business entity that provides liability protection like a C Corporation but is taxed differently. Instead of the business paying taxes, the profits “pass through” to the owners, who report the income on their personal tax returns. This avoids the “double taxation” that applies to C Corporations.
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S Corporations have some restrictions: they can’t have more than 100 shareholders, and all must be U.S. citizens or residents. Despite the limits, many small business owners choose S Corps for the tax savings and legal protections.

The charging order (especially under Wyoming and Nevada law) is the key asset protection feature of LLCs and LPs. The charging order is a lien against distributions from the LLC or LP. If no distributions are made the judgment creditor does not collect. Importantly, under Nevada and Wyoming law the judgment creditor cannot force a sale of the asset(s) like they can in California and other states.

Yes, Nevada provides corporations with between one and 99 shareholders the same beneficial charging order protection.

An EIN is like a Social Security Number for a business. The IRS assigns such a number to each newly formed entity. It is used as an identifier when opening bank accounts, hiring employees and the like.

Each state requires that a resident (or registered) agent be identified and located in the state of incorporation and any states where business is conducted. The resident agent’s job is to accept service of process (i.e., notice of a lawsuit) and other official notices. Because lawsuits are served on the resident agent it is important to use a service that is professional, appreciates the importance of such notices and will be in business for the long-term. Corporate Direct, Inc. provides resident agent services for $145 per year.

An important element in using a corporation is providing the public with notice that they are doing business with a corporation. To that end, you will use Inc., LLC or LP, (as applicable) on all of your brochures, contracts, checks, cards, and the like.

Yes. Your company name must be unique and not already registered in the state. It’s smart to have backup names ready. If you’re forming in one state and registering in another, the name must be available in both. Also, registering a name doesn’t give you trademark rights—you’ll need to file separately for trademark protection.

In order to maintain the limited liability protection afforded corporate entities certain minimum formalities must be met. These include filing statements and paying annual fees, maintaining a resident or registered agent and keeping corporate minutes. Failure to follow these formalities can result in personal liability to officers, directors and shareholders.

Most every state requires that the owners and managers of an entity meet once a year to discuss the affairs of the business. To prove that this required meeting took place, minutes detailing decisions made at the meeting are written and kept with the corporate, LLC or LP records. Corporate Direct, Inc. provides minute preparation services for a reasonable fee.

Business credit is a separate track of financing independent of your personal credit. Using business credit strategies wisely can greatly assist you with your growth objectives.

Foreign investors are welcome to invest and do business in the U.S. Still, they must realize that the U.S. is a litigious society and they must protect themselves with asset protections strategies as any American would. Depending on their country’s tax system and double tax treaty with the U.S., LLCs and C corporations can be used to protect foreign investors.

Corporate Direct, Inc. provides affordable entity formation and maintenance services. Given the risks associated with doing business and/or holding real estate as well as the possible loss of personal assets, the benefits of limiting liability and protecting assets for a very affordable price are quite substantial.