Law Offices of Gary Green is located in Little Rock and serves clients throughout Arkansas and across the country.
Incorporation and a limited liability company are both ways to attempt to avoid personal liability by creating a separate legal entity that is recognized as a person under the law. A limited liability company (LLC) is a legal form of business offering limited liability to its owners. It is similar to a corporation and is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners.
If you choose to limit liability in this way, it is important to remember that the mere fact of incorporating the business or forming the limited liability company is not enough. You must hold out for the world to see that they are dealing with a separate entity and cannot reasonably expect personal liability from the owners of the business. In this regard, the name of the business should always show the limited designation when the name is displayed, e.g., on signage, stationery, business cards, etc. In addition, when signing for the company the signer should always have a title following the signature, e.g. John Doe, President. In case the corporate or limited veil is pierced, liability insurance is always recommended to a business owner.
The main difference we find between corporations and limited liability companies is the record keeping requirements. A corporation can have its corporate veil pierced for not keeping corporate records, while a limited liability company is not expected to keep much in the way of records beyond its annual franchise tax requirement and income tax reporting requirements.
Corporate records should be kept of all major transactions and updated at least annually. These record keeping requirements are statutory and are not as stringently found in the later-year statutes, which allow the creation of LLCs. LLCs pass all income directly to the members, with no lower taxation applicable to the LLC entity.
While limiting liability is probably the most important reason for forming a small company, tax treatment is also a consideration. Companies are usually taxed at a lower rate than a high-income individual is and corporations sometimes can elect a fiscal year end other than the calendar year while LLCs cannot elect a year end other than the end of the calendar year.
Without giving tax or securities advice, our fee for incorporating a small business or forming a limited liability company in any state in which we have an office is $500.00 plus costs. Costs include filing fees at the Secretary of State’s office, initial franchise taxes, and the cost of a corporate record book. Costs vary from state to state but usually do not exceed $200.00.
Contact the attorney manager of Law Offices of Gary Green in the state in which you reside for this service or for any questions or additional information contact us toll free and without obligation at 1-888-442-7947 or send us an e-mail at ggreen@gGreen.com.