| 1) Should I protect my home and personal assets by | | | | accountant so that he can discuss with the accountant |
| incorporating my business? | | | | whether you should be a corporation or a limited liability |
| Typically, yes. The single most important reason for | | | | company. The attorney will need to know the names, |
| incorporating is the fact that debts of the corporation | | | | addresses and social security numbers of each of the |
| and claims against the corporation will not adversely | | | | shareholders/members of the corporation or limited |
| affect your home and other personal assets. | | | | liability company. |
| 2) What is the difference between a corporation and | | | | 4) If I incorporate, will I need to do anything each year |
| a limited liability company (LLC) in Rhode Island? | | | | to keep the corporation in good standing? |
| Both a corporation and a limited liability company (LLC) | | | | Yes. An annual report filed with the Secretary of |
| provide asset protection against claims against your | | | | State is required each year listing the address of the |
| personal assets. The main difference between the | | | | business and the current shareholder/member. |
| two involves the treatment of profits and losses for | | | | Typically, an attorney prepares this report and updates |
| income tax purposes. A corporation is a taxable entity | | | | the corporate minute book by preparing the minutes of |
| and pays taxes on its profits. A limited liability company | | | | the annual meeting. |
| does not pay taxes on the corporate level, but its | | | | 5) If I am operating a business with another person, |
| profits and losses are taxed on each member's own | | | | should I form a partnership or incorporate? |
| tax return. In a corporation the owners are referred to | | | | If you are in business with another person, at the very |
| as shareholders and in a limited liability company the | | | | least you should have a partnership agreement |
| owners are referred to as members. The chief | | | | indicating who owns the business and how decisions |
| executive officer of a corporation is the President. The | | | | are made in the operation of the business. Another |
| chief executive officer of a limited liability corporation is | | | | crucial aspect of the agreement will be determining |
| the Manager. | | | | what happens upon the death of one of the owners. |
| 3) What will my lawyer need to know at our first | | | | Often, it is preferable to set up a corporation or limited |
| meeting in order for him to incorporate my business? | | | | liability company so that your personal assets will be |
| You will need to provide the attorney with two or | | | | protected from the debts of the partnership and for |
| three potential names for the business so that he can | | | | any claims for injuries or property damage resulting |
| determine if any of them are already used. The | | | | from the other partner. |
| attorney will need to know the name of your | | | | |