Which Legal Entity Is Right For You?
Congrats! You’ve been so successful in your business that you’ve decided to form a legal entity. This is a great choice as not only does it legitimize your business, but it provides you with an individual shield of liability that protects the personal assets you’ve worked very hard for. Whether you’re forming a corporation or a Limited Liability Company, the formation is almost always governed by the appropriate Secretary of State depending on where you’re located. Despite their differences, corporations and limited liability companies (LLC) operate similarly.
This blog will first discuss the basics of a corporation then we’ll discuss the basics of an LLC.
A corporation is formed with the Secretary of State by filing Articles of Incorporation. In today’s time, most states allow you to file this document online. The process is relatively straight-forward. Most importantly, you must provide a business name. The name must be unique and distinguishable from any other currently registered entity. Next, you must provide a registered business address where records will be kept (note: some states don’t require this). All states require an entity to identify a Registered Agent to accept service of process on behalf of the entity. The Registered Agent must also provide an address in the respective state where they can accept service of process. Please note that all of this information is public record and usually easily accessible via the internet.
Most importantly, you must provide a business name. The name must be unique and distinguishable from any other currently registered entity.
After the basics have been established, some states will allow the filer to identify either officers and/or directors. Officers for a business entity usually fall under President, Vice President, Secretary, and Treasurer. Some of these officers may be combined. For example, if one person is running the entire operations of a company, it isn’t unusual for their name to be listed as President and Secretary/Treasurer or something similar. Some states will also allow the entity to list directors. Some states, such as Illinois, may request information about directors but they will not be publicly listed on the Secretary of State website.
An LLC is formed in a slightly different way. While the LLC’s organizational document can also be filed online, the LLC must file what is known as a Certificate (or some states use the term Articles) of Organization. The basic information is the same; business name, business address, registered agent, and registered office must be disclosed. However, another important difference is that an LLC does not operate using officers and/or directors. An LLC is usually member-managed or manager-managed. In the State of Illinois, an LLC must disclose managers or members with the authority of manager. The operating agreement of the LLC will distinguish whether the entity is member-managed or manager-managed (teaser: we’ll discuss operating agreements in a future blog).
Our office provides this service at a flat fee with transparent pricing so you know exactly what you’ll pay. Contact us for an initial, no-cost consultation today!
After a few days of processing and paying a fee, your new entity is formed with the Secretary of State and you’re one step closer to being ready to open your doors! If you’re unsure about forming your own entity or the following steps, let Hampleman Law, LLC handle it for you! Our office has experience in filing hundreds of businesses across various states. Our office provides this service at a flat fee with transparent pricing so you know exactly what you’ll pay. Contact us for an initial, no-cost consultation today!