| There is some confusion between what constitutes an | | | | as they pertain to your own state. There are fifty |
| LLC and what constitutes a corporation - indeed this | | | | separate US states, and corporate legislature is |
| exists to the point where many people still erroneously | | | | finalized at state level. Do not assume that because |
| refer to an LLC as a "Limited Liability Corporation" | | | | you have gone through the process before elsewhere |
| where the "C" actually stands for "company". There | | | | you can just do the same in a new state. Not only |
| are close similarities between a corporation and a | | | | could you be operating illegally, you could find that you |
| Limited Liability Company, but it is the subtle differences | | | | are costing yourself money unnecessarily. Neither of |
| between the two that are important for an individual or | | | | these situations is one that you want. |
| grouping trying to decide which suits their needs better. | | | | 3) In a corporation, it is always advantageous to own |
| Within the subtle differences lies the reason for picking | | | | assets such as shares in another company rather than |
| a corporation and not an LLC - or vice versa. If you | | | | owning cash. Corporate dividends are 80% tax-free, |
| wish to form a corporation, there are steps you should | | | | so you can save yourself and your company a great |
| always follow. | | | | deal of money in tax dollars if you invest sensibly. |
| 1) A corporation will generally have a three-part name | | | | Additionally, there is no limit on the amount of loss you |
| consisting of what are legally described as a | | | | may carry forward to the next tax year as a |
| "Distinctive element", a "Descriptive element" and a | | | | corporation. A sole proprietor cannot claim a capital |
| "legal ending". In the US, the legal ending for a | | | | loss of more than $3,000 unless this is offset by capital |
| corporation will, more often than not, be either "Inc" or | | | | gains. |
| "Corp". The distinctive element and the descriptive | | | | 4) Founding a corporation can be a good deal cheaper |
| element are more variable. Assume for a moment that | | | | than founding an LLC. It is worth checking with the |
| you are at the head of a company that makes cakes. | | | | state authorities to see whether this situation applies to |
| A similar company operating within the same | | | | you. The difference may not be much, but it could be |
| jurisdiction as you may already exist and go by the | | | | the difference between operating at a higher or lower |
| name "Sweet Cakes Inc.". For legal purposes, you | | | | level. It is for you to decide which step is for you, but |
| should choose a "distinctive" element that differentiates | | | | taking legal advice on which method suits your needs |
| you and them. "Suite Cakes Inc." would be considered | | | | is certainly a worthwhile step. It may save you a lot of |
| too close. "Delicious Cakes Inc." would, however, be | | | | money later on. |
| more than acceptable. The descriptive element is the | | | | Disclaimer: This article is for informational and |
| same, because you do the same work. The distinctive | | | | entertainment purposes only, and should not be |
| element ... well, distinguishes you. | | | | construed as legal advice on any subject matter. |
| 2) You should inform yourself of the corporate laws | | | | |