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Corporation or LLC?

An LLC is usually formed with the intent that the owners will be the same from the beginning to the end. There is no stock in an LLC. The ownership is represented by 100% membership interest. An LLC is an appropriate entity to use when you have investment real estate. If you have a rental property, it is a good idea to put it into an LLC. The reason is that if the tenant slips and falls and sues you, he will sue the LLC and not you individually.

If you intend on setting up an LLC, the lease should be in the name of the LLC and the tenants checks should be payable to the LLC. The tenants should have no doubt that the owner is not you, it is a company. An LLC can be treated like a corporation for tax purposes. It can have the same flow through attribute an S corporation is allowed. It can also have a closed status, like a C corporation. There is no record keeping requirements with an LLC. There is no board of directors. No requirement to hold board of directors or shareholders meetings. Therefore there are no corporate minutes, and no corporate veil to be pierced.


A corporation gives you the flexibility to add shareholders at any time. You can attract an owner by offering them stock in your corporation. You set the price for the stock. You can also take advantage of our nominee service when forming a corporation. In addition, if you have owners that want to remain anonymous, you can issue them "bearer shares" of stock. Their name is never disclosed in your records. The person that holds the stock on your records is "the bearer." The board of directors and shareholders are required to meet each year and appoint new officers. A corporation's board of directors can remove and appoint new officers any time. For tax purposes, you can elect to have your corporation treated as an S or C corporation. The S corporation's profit or loss will flow through to the individual shareholders' tax returns. If you elect a C or closed corporation, the profit or loss will not flow through to the shareholders' tax returns. Double taxation can occur with a C Corporation. As a C corporation, if your company made $50,000 last year and you and your other shareholder took $25,000 each, you would file a corporation 1120C return and pay tax on the $50,000. Then you and your other shareholder would have to pay tax again on the $25,000 you took at your personal tax rate.

Talk to your accountant to see what type of entity is best for you. If you do not have an accountant, you can go online and look through the yellow pages. We have a CPA we can recommend. Please contact us if you would like his telephone number.

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WE ARE A FORMS FILING SERVICE. WE ARE NOT ATTORNEYS. WE ARE NOT ACCOUNTANTS. Registered agents or incorporating companies are not required to be licensed by any state or federal authority. If you have any doubt about the type of entity you should file, call an accountant or an attorney. A good website for more information is Be careful when you choose your registered agent/incorporator. Here are a couple of tips to help you find your new agent: (1) go to the Secretary of State's website and check your registered agent out, search by company name; (2) do a search by registered agent to see how many companies the agent represents; (3) ask the registered agent for references. Talk to customers yourself to make sure they had a good experience; (4) google the company. Go to and type the company name in quotes. In google, you can also type the company name in quotes, and then the word 'complaint' afterthe company name. If any complaints have been filed against your agent, you will be able to read about them.