Corporations
The most important feature of a Corporation is that, legally,
it's a separate entity from the individuals who own or operate
it. One of the main advantages of forming a Corporation is
that it limits your personal liability. If a court judgment
is entered against the Corporation, you stand to lose only
the money that you have invested in the Corporation. Generally,
as long as you have acted in your corporate capacity (as an
employee, officer or director) and without the intent to defraud
creditors, your home and personal bank accounts and other
valuable property can not be touched by a creditor who has
won a lawsuit against your Corporation.
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About Corporations
Non-Profits
The main reason to form a Non-Profit Corporation is to get
a tax-exempt status under the IRC (Internal Revenue Code),
usually Section 501(c)(3). If a non-profit Corporation is
tax-exempt, not only is it free from paying taxes on its income,
but people and organizations who contribute to the Non-Profit
Corporation can take a tax deduction for their contributions.
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About Non-Profits
Limited Liablity Companies
The LLC is the newest form of a business entity. As with a
Corporation, all of the owners of a LLC enjoy limited liability.
This means that being a member of a LLC doesn't normally expose
you to legal liability for business debts and court judgments
against the business. Generally, if you become a LLC member,
you risk only your share of capitol paid into the business.
A LLC member may be an individual or a separate entity such
as a Partnership or Corporation that has invested in the LLC.
You and the other members jointly run the LLC unless you choose
to have it run by a single member, an outside manager or a
management group (which may consist of some members, some
non-members or both). Upon formation of the LLC, an operating
agreement should be created to clarify how the business will
be managed.
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About LLCs
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