As far as general for profit corporations, there are the "C", "S" and Professional Corporation.
By default a "corporation" is a "C" corporation, it is called a C corporation because it is taxed under subsection C of the IRS code. C Corporations can have an unlimited amount of shareholders that can be all forms of legal entities.
The S Corporation was created for smaller businesses to avoid double taxation and falls under the IRS code, chapter "S" and has limitations on the amount of shareholders and cannot be owned by anything other than an individual.
Professional corporations are essentially C Corporations that are limited to purposes of professional services such as doctors, dentists and attorneys. These types of corporations are formed under state laws that dictate what kind of professionals have to incorporate this type of legal entity.
Bylaws govern the corporation. It is an internal document that specifies the operational policies of the entity. All forms are included, even how the bylaws are changed, or amended. This will outline powers, rights and distribution of the stakeholders, from shareholders, directors and officers. Corporate Bylaws are not filed with any state or federal office.
Par value is the amount each share of corporate stock is worth, or its value. Each state is different with its par value parameters. Some states allow fractions of a cent in the par value, meaning your shares can be valued at $.001, while others cannot. Some states calculate franchise tax by the shares and par value of the corporation. You should make this decision with a legal or financial professional who works in the state you formed your corporation in. In general a low share amount and small par value will result in the same minimum franchise tax, if applicable.
The board of directors is an assembled body, selected by the shareholders of the corporation. The board of directors oversee the management and policies of the corporation, meaning they elect officers and approve decisions made by them. There isn't a requirement for a board of directors or a minimum amount, this is typically a larger corporate structure.
When you incorporate there are several operating formalities that must be conducted. The business is required to perform actions by both state and federal laws. These involve paperwork, reporting and nominal expenses throughout the year. The primary disadvantage are the formalities involved, however these are far outweighed by the liability protection and advantages, in most cases.
Articles of Incorporation are the actual documents that are filed and recorded with the secretary of state branch office. This is your corporation's "birth certificate" and it is a legal document.
A S Corporation is a corporation that falls under a different IRS tax classification, specifically sub chapter S election using IRS form 2553. This allows the corporation to be taxed as a partnership, a "pass through" tax entity where the profit and losses are recorded on the shareholders individual tax returns.
Any U.S. resident over the age of 18 can incorporate. There are other criteria for non U.S. residents to incorporate that depend on the country and corporation type.
Professional corporations are filed as standard C corporations and can choose to elect S corporation status. The primary difference is the type of business and what professional service can, or has to, be a professional corporation. In general, doctors, dentists and attorneys will form professional corporations
A limited liability company, or LLC, is an entity created under state laws which has characteristics of both a corporation and a partnership. Like a corporation, the owners of a LLC are not personally liable for the debts of the LLC. Like a partnership and sole proprietorship, an LLC has operating flexibility and is a pass-through entity for tax purposes. This means that the profits of the LLC are passed through and taxable to the owners of the LLC.
States require LLCs to designate a Registered Agent, that is, an individual or other LLC or corporation that resides in the state of formation. An LLC may not serve as its own Registered Agent. The Registered Agent's role is to receive service of process and correspondence from the State on behalf of the LLC. A Registered Agent must provide a physical address (no PO boxes).
If the LLC has two or more owners, you must obtain an EIN. A single-member LLC that accepts the default tax classification (i.e. treated as a sole proprietorship for tax purposes) is not required to obtain an EIN. However, you may still want to obtain an EIN if you have or expect to have employees, for state tax purposes or for other business reasons, such as using your EIN to apply for business credit accounts in the name of the LLC, etc.
Some states require an LLC to adopt an Operating Agreement. However, you do not have to file an Operating Agreement with the state in order to form an LLC. Even where not required by law, such agreements are highly recommended, especially in the case of partnerships and multi-member LLCs.
Interests in the LLC held by a sole owner are not considered a "security" by definition. Different scenarios apply in the case of co-owned LLCs. Generally speaking, if all of the owners will actively manage the LLC, the ownership interests will not be considered securities. For LLCs that choose to accept investments from outsiders or are operated by a special management group, the ownership interests may be treated as securities by your state and by the federal Securities and Exchange Commission (SEC). In this case, an exemption from the state and federal securities laws must be obtained prior to investments by the the initial owners. In the rare event that you do not qualify for an exemption to the securities laws, you must register the sale of your LLC's ownership interests with the SEC and your state.
In most states, the LLC has perpetual existence. Unless otherwise stated in the Articles of Organization or Operating Agreement the LLC may be dissolved upon the death, withdrawal, resignation or bankruptcy of a member, unless the majority of interest holders vote to continue the LLC within 90 days of the event.
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