LLCs & Corporations
Our law office helps people with their business formation needs, including creating limited liability companies (LLCs), partnerships, and corporations (C Corporations and S Corporations). Our law office helps create new business entities in Missouri, Kansas, or Oklahoma.
If you are wanting to start your own business, you need to consult with our law office to address the advantages and disadvantages of each type of business entity and determine which entity is best for your needs.Limited Liability Companies (LLC)
A Limited Liability Company is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.
Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Both Missouri and Kansas also permit "single member"Â LLCs, those having only one owner.Corporation Basics
There are two types of corporations, an S Corporation and a C Corporation.
S Corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.
C Corporations are corporations that are treated as a separate taxpaying entity for federal income tax purposes. A corporation conducts business, realizes a net income or loss, and distributes profits or losses to shareholders.
The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders and shareholders cannot deduct losses of the corporation.Frequently Asked Questions
Should I form an LLC or Corporation?
Both offer the advantage of protection of personal assets, but let’s look at other advantages. LLC Advantages: No limit on number of owners, profit and loss passes through to the owners’ personal tax returns. LLC Disadvantages: No stock to issue, unable to engage in income splitting to lower tax liability. Corporate Advantages: Can issue stock to attract investors, can engage in income splitting to possibly lower tax liability. Corporate Disadvantages: Annual meetings and record of minutes are required, S corporations have restrictions on number of owners, C corporations incur double taxation.
I Want To Start A Corporation, What Do I Need To Know?
There are several steps in setting up a corporation: Choosing a Corporate Name - Your corporation's name must contain: "Incorporated," "Corporation," or "Company." The word company cannot follow the words: "and" or "&" or "Limited." Prepare and File Articles of Incorporation – Filings with the state makes your corporation a legal entity. The article must include the name and address of the corporation; the name and address of the agent in charge of service of process; the number of shares authorized to be issued by the corporation; the names and address’ of each incorporator; the corporation’s purpose; lastly, whether the corporation’s existence is perpetual or limited. Appoint a Registered Agent – Missouri and Kansas require corporations to have an agent of public record for service of process to accept legal documents in the state of behalf of the entity. The agent must have a physical address in the state. Set Up Corporate Records Book – A records book contains all important information including, but not limited to, the time of director and shareholder meetings, stock certificates, stock certificate stubs, and more. Prepare Corporate Bylaws – Bylaws are basic ground rule for the internal operations: your corporation. While they are not mandated by, the state they do have advantages such as: 1) establish your corporation’s rule for operating, and 2) show creditors, banks, and the IRS that you are operating a legitimate business. Appoint the Initial Corporate Directors – The initial corporate directors must be appointed by the incorporator. An “Incorporator’s Statement” must be completed stating the names and addresses of the initial directors. The incorporator must place a signed copy of the statement in the corporate records book. Hold Your First Board Meeting of Directors – The first meeting of the corporation’s board of directors should be held so the directors can appoint the corporate officers, adopt the bylaws for internal operations, select a corporate bank, authorize the issuance of shares of stock, set the fiscal year on the corporation, and adopt an official stock certificate and corporate seal. Issue Stock – Not legally required, but most corporations usually do issue, at the least, paper stock certificates to each shareholder. Comply with Other Tax and Regulatory Requirements – Additional tax and regulated requirements may apply to your corporation, including filing for an EIN or S or C corporation status. Lastly, you’ll need any local or state business licenses require for your form of business. Foreign Corporations in Missouri – All corporations operating outside of Missouri or Kansas must register with the Secretary of that state to do business. The corporation must register an agent physically located in that state for service of process. If you have any more questions or concerns or would like help setting up your business, call our office for a free consultation today!
What should I list in the articles of organization?
You will want to list specific purposes related to your company’s business or endeavor.
How Many People Are Needed To Form An LLC? Do I Need A Board of Directors?
Only one owner is needed to form an LLC. However, the LLC members should enter into an operating agreement, which outlines the rights of the members and the rules for running the company.
Must A Manager Be A Member To Run The LLC?
No. Missouri law does not require that a manager also needs be a member of the LLC.
What Is The Life-Span of An LLC?
A LLC may exist for as long as the members choose. Whether it be a specific date, number of years, or even after the occurrence of specific events.
Do I Need To File Annual Minutes for my LLC?
No. Missouri or Kansas law does not require annual minutes to be filed.