Business Start-up Attorney
If you are looking to start a business in Michigan or incorporate your existing business in Michigan, contact the law office of James P. Montagne, P.C.
You are taking enough risks in business. You are creating jobs and building wealth. You don't need to risk your personal assets, such as your home, retirement accounts or other investments in the process. Corporations, whether it be a traditional corporation, or a limited liability corporation, an LLC, when properly set up and funded, limits your liability to the assets of the corporation.
Determining the type of corporation required is a challenge:
TRADITIONAL CORPORATION
Traditional Corporations are registered with the state. You can choose your own name. The name of your corporation must be followed by an Inc. Ltd. or LLC. Once your name has been secured, no one else can use it. Articles of Corporation are filed with the State of Michigan. You must select officers, the resident agent, issue stock and draft by-laws.
SUBCHAPTER S CORPORATION
Once you have formed a traditional corporation, you should file for a Subchapter S designation with the IRS. The Subchapter S designation allows corporate profits to pass through to the individual shareholders as ordinary income. It prevents double taxation on corporate profits, that is, without the designation the profits are taxed as income to the corporation and then once again as income to the shareholders. As a subchapter S corporation, you are limited to one class of stock.
LIMITED LIABILTIY CORPORATION (LLC)
Limited Liability Corporations are a creature of statute. They have been in existence for approximately ten (10) years. LLC's are convenient. They provide the limited liability of traditional corporations as well as the simplicity of partnerships. They do not require a sub-chapter S election as do traditional corporations. They do not require their own income tax return and the income to a sole member LLC can be reported on individual tax return under Schedule C.
PARTNERSHIP AGREEMENTS
Partnerships do not provide the limited liability of Corporations and should probably be avoided when considering a business entity.
Contact the Livonia office of the law firm of James P. Montagne, P.C. toll free at 1-888-345-7246.