Starting a business can be a stressful, yet exciting time. One of the first steps to starting your own company is deciding on whether you should incorporate or form an LLC. Corporations and LLCs can both help protect personal assets from business debts and any potential lawsuits or judgments made against your business entity.
A LLC is inexpensive and easy to set up, while still being a legitimate business entity. You are able to define who the “members” are, and the percentage that each of these members owns. One of the major benefits is that an LLC is not taxed as an entity, only the members are taxed.
There are two types that fall under an Incorporation (Inc.), a C-corp and an S-corp. A C-corp is a full corporation and a legal/tax entity on its own. This allows for the maximum amount of protection for the company. C-corps have a board of directors and have to carefully adhere to certain reporting requirements. There are also shareholders in a C-corp. An S-corp functions the same as a C-corp, but has the same tax advantages of an LLC. There are also large restrictions on who the investors can be in an S-corp, such as they cannot be corporations, or non-residents of the U.S.
Corporations and LLCs can continue to exist even if ownership or management changes.
It is important to make sure you sign any legal documents as an officer of an LLC or Corporation. Otherwise, the other party may try to pierce the corporate veil and come after your personal assets.
Be sure your insurance agent knows if you change the officers of the LLC, Corporation or partnership. Insurance policies must correctly name the LLC, Corporation or partnership as named insured. Any change in the structure of the organization must be shared with the insurance agent.
For all of the insurance needs of your business in Tarrytown and Westchester County, contact Allan Block Insurance.