GLOSSARY OF TERMS

Is my Corporate Name Available?
What is a Registered Agent?
What is a Shareholder?
What is a Director?
What are the Officers?
Can One Person be the Shareholder (Owner), Director and Officer?
What is a Member?
What is a Managing Member?
What are the Managers?
What is a Federal Employer Identification Number?
Does the corporation have to authorize (have) and issue stock (shares) ?
What is an LLC Operating Agreement?
How will the LLC be taxed?
What is an S-Corporation?

Is my Corporate Name Available?
We will check the name in the state that you want to form the company. Once the company has been filed and accepted by the state you can then use the name. We can not guarantee whether or not your corporate name infringes on the rights of someone else.

What is a Registered Agent?
It is a requirement to have a Registered Agent. Usually someone from the company will act as the Registered Agent provided that they have a street address in the state of incorporation. However if you do not have a street address in the state of Incorporation we can appoint a Registered Agent.

What is a Shareholder?
The shareholders are the owners of the corporation. The owners can be individuals or other entities (such as Corporation, LLC or other entities).

What is a Director?
The Directors of the Corporation are appointed by the shareholder to represent the shareholders interests and to approve major corporate decisions.

What are the Officers?
The Officers of the Corporation are the President or CEO, Vice President, Secretary and Treasurer. The Officers are appointed by the Directors. The job of the Officers is to run the company and manage the day to day operations. In most states one person can hold all of the Officer Positions.

Can One Person be the Shareholder (Owner), Director and Officer?
Yes in most states one person can hold all of the above positions and it is not uncommon with small closely held corporations.

What is a Member?
The members are the owners of the LLC. The owners can be individuals or other entities (such as Corporation, LLC or other entities).

What is a Managing Member?
A Managing Member is an owner of the Limited Liability Company who is also managing the company.

What are the Managers?
The Managers of the LLC are appointed by the Members in the event the LLC will not be managed by the members.

What is a Federal Employer Identification Number?
The Federal Employer Identification Number is also known as the Fed ID, Tax ID, Federal ID Number and or Employer ID. The Federal ID Number is a 9 Digit number similar to a Social Security Number. The Fed Id is issued for businesses so that they can file Tax Returns and open Business Bank Account.

Does the corporation have to authorize (have) and issue stock (shares) ?
Yes and Yes, the corporation must authorize shares in the Articles of Incorporation and issue the stock (shares) of the corporation to the owners.

What is an LLC Operating Agreement?
The Operating Agreement is an agreement between the owners (members) specifying who owns what percentage of the company, who the company will be managed, who will contribute what to the business and many other provisions. Olen provides a sample Operating Agreement automatically when you form an LLC with us.

How will the LLC be taxed?

Typically when there is only one individual owner of the LLC, the company is taxed like a sole proprietorship. The individual owner of the LLC file a Schedule C Profit and Loss on their personal tax return.

If there are 2 more owners, the LLC is normally taxed as a Partnership and files IRS Tax Return Form 1065.

One of the nice features of the LLC is that it can be converted for tax purpose to Corporation or S Corporation by first filing IRS Form 8832 to classify the entity as Corporation and then by filing IRS Form 2553 for the S-Corp Election.

What is an S-Corporation?
An S-Corporation (Sub-Chapter S) is corporation that files IRS FORM 2553 listing the individual owners and number of shares owned. The S-Corp Election allows the owners of the corporation to avoid DOUBLE TAXATION of the companies profits. The profit of the company is passed through to the owners of the corporation with the profits being taxed at the Corporate Level. The owners of the corporation receive a K-1 Profit or Loss statement and the profit is then reflected on their personal return and taxed on the personal return.
There are limitations to the S-Corporation such as, not having more than 75 owners. Owners typically need to be individuals who are US Citizens or US Resident Aliens and usually can not be another entity such as another Corporation. The S-Corporation can also only issue one class of shares.