In determining if you wish to establish a business Corporation or Limited Liability Company, you will want to consider many factors, from management structure to tax codes.
Consulting with an attorney, can help you determine which structure best suits your needs.
Why form a North Carolina Corporation? There is no liability risk of your personal assets being affected in the event of a lawsuit. This protection is accomplished because forming a corporation in North Carolina causes a separation of the company from the individual. Also, there are other advantages with the formation of a corporation. There are certain tax advantages with filing a corporation vs. a sole proprietorship. A CPA may be able to provide more detailed analysis of your tax savings.
Characteristics of a Corporation: The life of the corporation is independent of the incorporator, share holder or owner. The corporation dies when it is dissolved. It can in essence outlive the people who started the entity; You can easily transfer ownership of the corporation, you may need to meet certain criteria however;
Registered agent, do I need one for a corporation? Every Secretary of State requires an individual to serve as a registered agent. The registered agent should be someone that you can trust to delivery documents that the Secretary of State will send you. This individual need to be trust worthy because the Secretary of State will be sending legal documents to serve process on the individual should your company be named in a lawsuit. The address must be a physical address located in the same state as your corporation.
Why form a North Carolina LLC? Forming a North Carolina LLC will protect yourself and your personal assets from liability should your company be faced with a lawsuit. This reason alone should be reason enough to form a LLC. The LLC creates separation from the owners, members, and organizers. Their assets are not subject to a lawsuit and protected from the debts and obligations of the LLC. Other advantages exist for the LLC such as taxes, business dealings etc.
What is a registered agent for an LLC? A registered agent is an individual or a third party who will be served with process by the Secretary of State should your company be named in a lawsuit. This individual should be a resident of the state in which your company is located, over 18 years of age and trustworthy. In most cases, the organizer of the LLC can serve as the registered agent. However if you can't provide an individual or an address in the same state as the LLC is filed in, a third party entity can serve as the registered agent for a fee. This entity will accept mail on your behalf and forward it onto you.
Management by member or manager: A limited liability company's management can be done in two different ways. The LLC can be managed by a member managed system or a manager managed system. With the member managed system, the members of the LLC have equal management responsibilities and decisions are made by the members. However, the manager managed system allows for a third party other than the members to manage the daily affairs of the LLC.
Limited Liability Company
LAW OFFICE OF C. DOUGLAS MAXWELL, JR. P.O. Box 2465, Fayetteville, North Carolina 28302 Telephone: (910) 483-1414 FAX: (910) 483-7443