Keep in mind, in some cases you as the owner would need to obtain Individual Tax ID Number (ITIN), adding another $300-$400 per partner, but it’s a one time cost. For LLCs in every state, the government must know where to send important tax and legal documents, such as service of process or annual renewal forms, on behalf of your business. All LLCs must have a “registered agent” with a physical address (not a P.O. Box) in the state where the LLC is created. Registered agents can be individuals or other businesses, and can be commercial or non-commercial in nature.
Prior to investing in your startup, investors at every stage of your startup — from angels to venture capitalists — will insist that you incorporate. Any investor funds you receive cannot be co-mingled with your personal funds. To prevent this, you need to incorporate so you can open a bank account in the company’s name, isolate company funds and maintain financial statements. Corporations are often subject to additional taxes, while LLCs may be claimed on one’s personal tax documents. Instead of publicly traded shares, the company is run by a private group of shareholders; no board of directors is required. In more recent years, a growing number of companies have chosen to operate as B-corporations. B-corp formation means these businesses receive certification through a qualifying third party or state-level recognition of their ability to create social good.
How to start a business
Remember that the availability and regulations of these types of LLCs can vary depending on the state you’re in. It’s always a good idea to consult legal and financial experts to determine the best type of LLC for your specific situation and location. So, when you put all these benefits together, forming an LLC can be a savvy move for your business. It provides protection, flexibility, simplicity, and credibility. After officially forming your LLC, you should consider registering it with the federal government by applying for an Employer Identification Number (EIN) from the IRS.
Form your Corporation in Delaware
You also might be able to access favorable tax structures in the new state. Tap into industry-specific resources that might not be available in your current state. Remember, what constitutes “doing business” varies by each state. It will also ensure you are following and adhering to local business laws. We have all the tools you need to start, run, and grow your business, whether you’re selling in person, online, or both. And we’ve made all our tools to work together as one system, saving you time and money — and making decisions easier.
I wrote an article not long ago with a number of documents that you should also create along with your incorporation, especially the Bylaws and the Stock Purchase Agreements for the founders. Partnerships must meet the licensing and tax registration requirements that apply to any new business. A partnership agreement isn’t required to establish a partnership.
Step 8: Register to do business in other states (optional)
If the corporate formalities are not observed, someone suing the corporation may be able to show that the corporation is not a separate entity from its shareholders. The shareholders will then be liable for the corporation’s debts. Wolters Kluwer is a global provider of professional information, software solutions, and services for clinicians, nurses, accountants, lawyers, and tax, finance, audit, risk, compliance, and regulatory sectors. And also, don’t forget to apply for an Employer Identification Number (EIN) which will allow you to legally operate your business in the United States and comply with the IRS. For more specialized and tailored help, you can also get in touch with doola.
As a business grows, owners may decide to expand and form another structure, such as a partnership or limited liability corporation (LLC). Read more about USA company formation here. The PA Business One-Stop Shop can help connect you to your local SBDC center where experts can help you determine which business structure is right for you.