Incorporate Your Business: When to Do It and How

Incorporate Your Business: When To Do It and How......Page 1
 Contents......Page 7
 Chapter 1: Why Should I Incorporate My Business?......Page 13
  What a Corporation Is, and What It Is Not......Page 15
   Who Starts and Who Owns a Corporation?......Page 16
   Limiting Your Liability for Business Debts......Page 17
    Liability of Stockholders Who Are Also Employees of Small Corporations......Page 19
   Save Payroll Cash by Incorporating......Page 21
   Ease of Transferring Ownership......Page 22
   Corporations and Other Business Forms Are Too Complicated......Page 23
   Corporations Cost Too Much to Set Up and Operate......Page 24
   A Corporate Form Does Not Entirely Protect Professionals......Page 25
  Tax Savings In a Corporation? Maybe......Page 27
   An Example of Tax Saving from a Corporation......Page 28
  Some Background, Concepts, and Explanations......Page 29
   How a Sole Proprietorship Is Taxed......Page 30
   How a Corporation Is Taxed......Page 33
   Double Taxation of Corporate Profits......Page 35
    Keep Earnings in the Corporation......Page 36
    Pay Salaries to Stockholders/Employees......Page 37
    The IRS Position on Salary Levels for Stockholder/Employees......Page 38
    Pay Interest to Stockholders......Page 40
   Alternative Minimum Tax on Corporations......Page 41
   What If the Corporation Has a Net Loss Instead of Net Taxable Income?......Page 42
  S Corporations......Page 43
   How Stockholders Take Profits out of an S Corporation......Page 44
    Type of Stockholders......Page 45
    Use of the Corporation’s Loss, If It Has a Bad Year......Page 46
    Flow-through of Certain Tax Attributes to the Stockholder......Page 47
    S Corporations Are Limited to One Class of Stock......Page 48
   When to Use an S Corporation......Page 49
  Sole Proprietorship......Page 53
  General Partnership......Page 54
  Limited Liability Company (LLC)......Page 55
  Other Entities With Limited Liability of the Owners......Page 57
  Passive Losses......Page 58
  Which Business Form Best Attracts Investors to Your Enterprise?......Page 59
 Chapter 4: How to Structure a Corporation......Page 63
   Assets, Liabilities, and Equity......Page 64
   How to Invest In Your Corporation......Page 66
    Debt versus Equity......Page 70
    The IRS Position on Debt versus Equity......Page 72
   How to Invest In Your S Corporation......Page 73
   Keep Control of Your Corporation If Possible......Page 74
  Do-It-Yourself Incorporation......Page 77
  Using Professionals......Page 78
   Choosing an Accountant......Page 79
   Decide on the Size of the Initial Investment in the Corporation......Page 80
   Size Your Investment to Qualify for Treatment as a Small-business Corporation......Page 82
   Who Will Be the Owners (Stockholders) of Your New Corporation?......Page 83
   Determine How Many Shares of Stock Will Be Authorized and Issued......Page 84
   Determine What the Price per Share of Stock Will Be......Page 86
   Determine Who Will Be the Directors and Officers, and Assign Duties......Page 89
   Determine Who Will Be the Incorporator(s)......Page 91
   Select a Resident Agent for Your Corporation......Page 92
   Have All Prospective Stockholders Sign a Stock Subscription......Page 93
   Determine the State in Which You Will Incorporate......Page 94
   Choose a Name for Your Corporation......Page 97
   Determine If You Can Use a Simpli.ed Procedure......Page 100
  Prepare a Pre-incorporation Agreement......Page 101
  Prepare a Stockholders’Agreement......Page 102
   Initial Action the Incorporator(s) Should Take......Page 105
   Hold Organizational Meetings......Page 111
   Register Your Corporation with the Internal Revenue Service (IRS)......Page 112
   Register Your Corporation with Your State’s (and Any Foreign State’s) Tax Authorities......Page 113
   Pay Particular Attention to the Initial Corporate Income Tax Return......Page 114
  Steps to Keep Your Corporation Alive......Page 115
   Hold an Annual Board of Directors Meeting Every Year......Page 116
   Live Your Corporate Life as If You Meant It......Page 117
  Nonprofit Charitable Organizations......Page 118
 Appendix A: Useful Forms......Page 119
 Appendix B: Useful Addresses......Page 225
 Appendix C: Short Course in Corporate Finance Terms......Page 239
 Appendix D: Glossary......Page 243
 Index......Page 251
 End User License Agreement......Page 259