When starting a business, it is important to determine the legal structure of your company, as it can have implications on taxation, liability, and ownership. The two most common types of business structures in the United States are C corporations (C corps) and S corporations (S corps). Here's how you can verify the legal structure of your business: 1. Check your formation documents: Review the paperwork you filed when you registered your business. This could be your articles of incorporation or organization, which you would have filed with the state. It typically mentions the type of entity you formed. 2. Consult with your attorney or accountant: Seek advice from a professional who can guide you through the process. They will review your business structure and provide you with the necessary information. 3. Visit the Secretary of State's website: Each state has a Secretary of State website where you can search for business entities. By entering your business name, you can find information about your company, including its legal structure. 4. Contact the IRS: The Internal Revenue Service (IRS) can also provide information about your business structure. You can call the IRS Business and Specialty Tax Line at 800-829-4933 and provide them with your business details to get clarification. Remember, determining the legal structure of your business is crucial for various reasons. C corporations have separate legal and tax entities from their owners, offering limited liability protection. They are subject to double taxation, where both the corporation and shareholders are taxed. On the other hand, S corporations are pass-through entities, meaning the income and losses pass through to the shareholders' personal tax returns, avoiding double taxation. It is essential to consult with professionals or conduct thorough research to ensure you select the appropriate legal structure for your business.
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User Comments
Amelie Perry
a year ago
Did you make a corporate election? This would be something you actively did, by filing forms. If all you did was set up a llc, you might not be a corporation at all.
Amiri Butler
a year ago
Did you incorporate a legal entity or did you go to the bank to open a business bank account as a sole propreitor?
Ace Silva
a year ago
Did you make a corporate election? This would be something you actively did, by filing forms. If all you did was set up a llc, you might not be a corporation at all.
Graham Woods
a year ago
And just want to add that banks are notoriously stupid when it comes to requirements for opening an account. You can put whatever the hell you want and it doesn’t matter. For a loan, yes it matters. To open an account it does not.