Registration and Types of Entities
REGISTRATION OF THE “TURNKEY” ENTITIES
We prepare basic and complete package of documents, required for registering and operating legal entities of any type in the US (limited liability companies (LLC), partnerships, etc.).
The basic package includes the preparation of documents necessary to register an enterprise in the US – an application for registration of the company (Articles of Organization), minutes of the first meeting of the founders (Minutes Meeting). We submit the enterprise registration documents to the appropriate authorities; obtain a certificate of state registration (Certificate of Organization), a notice from the tax authority with an assigned employer identification number (Employer Identification Number, EIN) to the enterprise.
In addition to the documents listed above, a full package of documents includes the creation of a regulatory agreement between the founders of a newly created enterprise, depending on its organizational and legal form (LLC Operating Agreement, Partnership Agreement), as well as the charter (Charter). As part of this package, we also provide services for processing and submitting documents, required for founders to obtain individual US taxpayer numbers (ITIN). When a client uses our legal assistance in creating an enterprise, we exercise the full range of interests and strategic plans of the client.
When choosing the jurisdiction of the enterprise, its form, tax and status, we conduct an in-depth analysis of the future structure of the partner, business and financial goals of the client.
The Founders can choose one of the following organizational forms taking into consideration its tax treatment:
C-Corporations:The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.
S-Corporations: S-corporations, like partnerships, are pass-through entities. That is, there is no federal income tax levied at the corporate level. Instead, an S-corporation’s profit is allocated to its shareholder(s) and taxed at the shareholder level.
Limited Liability Company (“LLC”)
The LLC combines the flexibility of a partnership with the limited liability protection of a corporation with the pass-through tax treatment of a partnership. Under the IRS regulations, an LLC with two or more members may elect to be treated either as a partnership or as a corporation for federal tax purposes.
If classified as a partnership for federal income tax purposes, both limited and general partners are entitled to pass-through tax treatment and will receive allocations of income, gain, loss, deduction, and credit and will receive distributions of money and property that adjust their bases (but not below zero) in their partnership interests.
General Partnerships vs. Limited Partnerships
A general partnership is the one in which all profits, managerial responsibilities and liability for debts are shared in equal proportion among the partners. A limited partnership venture is run by one or two partners known as general partner(s). Other contributors, known as limited or silent partners, provide capital but aren’t allowed to make managerial decisions.
A business trust is an unincorporated legal entity. Business trusts are treated like corporations for limited liability purposes in protecting their beneficial owners, trustees, and agents from liability for the obligations of the trust. Business trusts have commonly been used for mutual funds, real estate investment trusts (REITs), and other finance entities that securitize assets.
A nonprofit corporation is an entity formed under state law for a socially beneficial, not-for-profit, purpose that has elected and been qualified to be treated as exempt from federal taxation due its social purpose. Tax-exempt status must be applied for on IRS Forms 1023 or 1024 and at the state level. Specific rules must be followed in order to maintain nonprofit organizational status.
Non-profit organizations include churches, public schools, public charities, public clinics and hospitals, political organizations, legal aid societies, volunteer services organizations, labor unions, professional associations, research institutes, museums, and some governmental agencies.
Our services include advising nonprofits on:
- The proper organization form for the non-profit entity;
- Preparing the appropriate organizational documents;
- Structuring the entity;
- Formulating, structuring and implementing governance and policies;
- Ensuring qualifications for tax-exempt status and tax-deductible contributions;
- Preparing the Internal Revenue Service application for recognition of tax-exempt status;
- Maintaining proper governance of non-profit entity.