The Corporation and the Limited Liability Company (LLC) are legal entities that are formed in compliance with your State's Business Corporation Act. Both forms of business structure protect the participants against personal liability. Equity in a Corporation is held by shareholders through stocks issued from the Corporation. These shareholders elect Directors who establish basic policy and elect their own corporate officers. Equity in an LLC is held by members through membership certificates issued by the LLC and operate the company as if they were partners. Although there are no formal officers, the LLC members may elect from among themselves a managing member to implement day-to-day operation of the business.
In order to create a Corporation or LL C you must first choose a name and verify availability. However, before completing and filing the proper legal forms with the state, you should consult a Corporate Attorney and a CPA to determine which entity is correct for your enterprise.
Once a Corporation or LLC has been established, the continuance and integrity must be maintained by these on-going rules:
- having the organization meeting and establishing the bank account prior to undertaking any operational activity;
- carefully drafting and following, on a daily basis, the articles of formation of the business;
- strict separation between business funds and personal funds;
- avoiding personal use of assets;
- paying all taxes due in a timely manner;
- having required insurance;
- purchasing and implementing the proper operational materials;
- annual meetings with recorded minutes.
To help form your Corporation or LLC, SCORE, A Resource Partner of the U.S. Small Business Administration, offers free, confidential one-on-one business counseling with experienced executives plus a day long monthly Workshop for a nominal fee. For the location, phone number and counseling hours of the office nearest you, call our main Dallas SCORE Office at (214) 987-9491.