Lastly, both forms of ownership allow for any type of owner to take equity position.
Meaning that owners in these entities can be individuals,
as well as other types of corporations, including more C-Corps or LLCs.
At this point you're head might be swimming in all these details.
Don't worry, just remember that most companies are generally very simply
structured C-Corps or LLCs.
But it is important to know these particular details that make
each one unique.
Lastly, I want to talk to you about the two documents that are necessary and
important to the formation of your company.
Not surprising, there is yet more similar, but
differently named documents regarding C-Corps and LLCs.
When forming an LLC,
you must file what is known as articles of organization in the state you live in.
When forming a C-Corp, you must file articles in the corporation.
The role of both of these documents is to set up the basics for the corporation,
such as contact information, mailing address, and ownership rights.
These documents are both filed with the state in which the company is registered,
and are part of the public record.
Also, I'd like note that,
in the United States, operating a business in multiple states is permitted, and
does not require you to form a new corporation in each state.
Rather, you must register your company with the state you planted your
business as an out of state entity.
The last two documents we'll cover or considered to be the blueprints for
the each type of entity.
These are the corporate bylaws in the case of C-Corps and
operating agreement in the case of LLCs.
What do they do?
Well, they define how the company runs and operates.
They formalize the structure in the company.
They determine roles and responsibilities.
Oftentimes they describe the powers, rights and capitalization distributions
of stakeholders, including shareholders, members, directors and officers.
And they help settle disputes that may arise among shareholders.
Lastly, these documents are not publicly filed but
rather internal legal documents signed by the owners.
This, of course, changes if the company becomes listed on a public stock exchange.
So what does all this discussion add up to?
Once again the goal is to get you familiar with this types of entities.
Ultimately we highly recommend that you work with an experienced and
trusted attorney to choose the correct business entity that will work best for
your future growth needs as well as your tax situation.
Also don't be afraid.
The reality is that most people make mistakes along the way when it comes to
incorporation.
Remember that mistakes can be corrected, albeit often at an expense, but don't let
perfection get in the way of progress for getting your business off the ground.
You'll learn a lot more setting up your entity that you ever will listening
to me or anyone else talking about this subject, so let's get to work.
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