Alpha Business Services  – Learning Center 

The process of incorporating entails the preparation of certain documents, including a document referred to as the “Articles of Incorporation,” and filing the documents with the Secretary of State. (For an LLC, the main document used to incorporate is referred to as the “Articles of Organization.”)

“Corporate formation” is a synonym for incorporation. It refers to the process by which a corporation or LLC becomes officially incorporated.

Hiring a lawyer to incorporate your business is not a legal requirement. Nevertheless, in certain circumstances it may be sensible to hire a lawyer to incorporate. It is recommended that you see a lawyer instead of using our services if your incorporation seems to involve a high degree of complexity, or if you have specific questions unanswerable on this site. Business owners sometimes feel more assured by hiring a lawyer to incorporate. In fact, if you have the extra time and money, we encourage you to hire a lawyer. However, Alpha Business Services is an accessible alternative for entrepreneurs who require precise, and efficient incorporation services for a fraction of a lawyer’s fees.  

In order to incorporate effectively, you need to know the following pieces of information: 1. Where to incorporate (which state), 2. Your choice of corporate form (C-Corporation, S-Corporation, or LLC). 3. An official name for your company. 4. The address of your company. 5. The name and address of your company’s resident agent. 

Why incorporation is necessary

Incorporating is essential to the success of any business. The process of incorporating entails the preparation of certain documents, including a document referred to as the “Articles of Incorporation,” and filing the documents with the Secretary of State. (For an LLC, the main document used to incorporate is referred to as the “Articles of Organization.”)

Below is an explanation of why it is necessary for every business to incorporate. The primary advantages of incorporation are discussed, as are the risks involved in operating an unincorporated business.

Shield yourself from liability  

The most important reason to incorporate your business is to protect yourself from business liabilities. If you are operating an unincorporated business, its creditors may be able to reach your personal assets. Assets such as your personal residence and personal bank account can be used to pay business debts or to satisfy a lawsuit against your business. If you incorporate, business creditors cannot reach your personal assets, as an incorporated business and its owners are separate entities. 

Establish perpetual existence and transfer of ownership 

Perpetual existence is an advantageous aspect of an incorporated business. Perpetual existence means that the life and continuation of the business will not be affected by the withdrawal or death of one of the owners. An unincorporated business’s existence, as well as its operation, is generally disrupted by the withdrawal or death of one of the owners. Subtract this risk from your business by incorporating. 

Similarly, the ownership interest in an unincorporated business may be very difficult to transfer. If the business is incorporated, the shareholders can easily transfer their interest by sale or gift.

Gain tax advantages 

If you incorporate your business, there are tax deductions for a wide variety of operating costs which will substantially cut back your company’s overall tax liability. These deductions may include the cost of materials/production, employee wages, the cost of insurance, the cost of retirement plans, as well as business travel and entertainment expenses.

Enhance the company’s image 

Another crucial reason to incorporate your business is that it adds credibility to its operation. The perception of a business is improved by its incorporation and use of “Inc.,” “Co.,” or “LLC” following the name of the business. Customers are more likely to trust and deal with a business that has this positive image. More importantly, the business will be more attractive to banks and investors if and when the business seeks outside financing.

Improve ability to manage 

The decision-making authority of an incorporated business is centralized, which usually means that the shareholders have vested the authority in a Board of Directors. The Board of Directors can delegate this authority to the company’s Officers. In an unincorporated business, the power structure and decision-making authority may not be defined and may be subject to manipulation by a co-owner or employee. This lack of structure will substantially affect the ability of the business to operate. Subtract this risk from your business by incorporating and thereby centralizing its management structure.  

What is a limited liability company (LLC)?

A Limited liability company (LLC ) is a business entity that offers limited liability protection and pass-through taxation. As with corporations, the LLC, legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.

The LLC allows for pass-through taxation, as its income is not taxed at the entity level; however, a tax return for the LLC must be completed if the LLC has more than one owner. Any LLC income or loss as shown on this return is passed through to the owner(s). The owners, also called members, must then report the income or loss on their personal tax returns and pay any necessary tax.

What LLC Forms are required to start a limited liability company?

Articles of Organization, sometimes also called a Certificate of Organization, must be prepared and filed with the State. Filing fees along with any applicable initial franchise taxes or other initial fees, must also be paid. If your LLC is formed through Alpha Business Services, LLC all you need to do is complete our simple LLC forms and we will do the rest. We will prepare and file your Articles of Organization and LLC forms, and pay the initial filing fees on your behalf.

Who can form an LLC?

Typically, there are no residencies or legal restrictions as to who can start an LLC. However, a few states impose requirements that members and/or managers must be at least 18 years of age, or the age of consent. For more information regarding the requirements of each state, view the LLC Formation Requirements page of our state guides.

Do I need an attorney to form an LLC?

No, you can prepare and file the Articles of Organization (one of the most important LLC forms needed) yourself. Be sure you understand the requirements of your intended State of incorporation. You can use Alpha Service’ to form your LLC, complete your LLC forms. If you are unsure of what business type is best for you, review our Types of Business Comparison Table and/or try our Incorporation Wizard. If you still have questions, consult an attorney or accountant.

What should I name my LLC?

Choosing the name of a new company is an important decision. It is typically advisable to select a name that projects the image you want for your new company. Selecting a name that is easy for customers to remember and to spell, also has considerable benefits. Legally, the name you select for your LLC must not be “deceptively similar” to any existing company in that State, and it must be “distinguishable on the record” of your State.  

It is possible that the name you select will not be available in your State of incorporation—that’s why Alpha asks for a second choice on our LLC Order Form. Additionally, most states require that the name you select shows that your business is an LLC, by including the words “Limited Liability Company” or the abbreviation of “LLC.”

How many people are needed to form an LLC?

There is no requirement specifying the maximum number of members (owners) an LLC can have. The IRS does allow one-member LLCs to qualify for pass-through tax treatment. Taxation of the one-member LLCs at the State level may be different.

How is a limited liability company (LLC) taxed?

Typically, LLCs are taxed like partnerships, with pass-through taxation. While multi-member LLCs must file an informational tax return, single member LLCs do not. In both cases, the profits or losses are “passed-through” the business and reported on the owners’ tax returns. Any tax due is then paid by the owners at the individual tax level.

LLCs can also elect to be taxed like corporations, where the profits of the LLC are taxed at the business level. The State income tax treatment of LLC profits and losses may or may not mirror the IRS tax treatment depending on the State. For more information on your State tax obligations, contact us with your inquires.

LLCs are also subject to any franchise taxes imposed by the State of Incorporation. A franchise tax is a tax imposed for the mere privilege of being an LLC incorporated or registered to transact business (through a process called ‘foreign qualification’) in that State. Franchise taxes are typically due annually, and the amounts differ by State. The first payment must be made within 3 months of forming your LLC. The State will send a bill to remind you to make this payment.

What is the organizational structure of an LLC?

An LLC is owned by its Members. They are analogous to Partners in a partnership or Shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes managers, because then the Members will not participate in management. If the LLC does not utilize managers, then the Members will closely resemble Partners because they will have a direct say in company decision-making. A Member’s ownership of an LLC is represented by membership interest, just as Partners have interest in a partnership and Shareholders have stock in a corporation.

How is an LLC managed?  

An LLC may be managed by its Members (owners) or by selected managers. If the LLC is to be managed by its members, it operates much like a partnership. Each member has an equal say in the company decision-making process. If the members choose, they may elect a manager or managers to act in a capacity similar to a corporation’s board of directors. These managers are in charge of the affairs of the LLC.

Member-management is the normal default rule of State law. This means that if managers are not selected in the Articles of Organization, LLC forms, the members will direct the affairs of the LLC.

Should I choose a limited liability company (LLC) or an S corporation?

While the S corporation and LLC both have pass-through taxation, the S corporation lacks the flexibility of an LLC in allocating income to the owners. Additionally, an LLC may offer several classes of membership interest while an S corporation may only have one class of stock.

In terms of number of owners, any number of individuals or entities may own interests in an LLC. However, ownership interest in an S corporation is limited to no more than 100 shareholders. Also, S corporations cannot be owned by C corporations, other S corporations, many trusts, LLCs, partnerships, or nonresident aliens. Finally, LLCs are allowed to have subsidiaries without restriction.

There are also differences in the handling of employment/self-employment taxes. 

What is a publication requirement?

A few states require notice to be published in a newspaper that an LLC has been formed. States with this requirement for LLCs include: Arizona, Nebraska, and New York. The Published Notice of Formation Service can be added to a Alpha LLC Formation Service order in each of these states. For New York, limited liability entities (LLC, LP, LLP), the New York Published Notice of Formation Service can also be purchased independently from Alpha. 

In New York, limited liability entities are required to publish notice of their formation or registration in two New York newspapers and to file proof of publication with the Department of State within 120 days. The publication is made at the county level in two newspapers. Failure to comply with the publication requirement by the deadline results in the suspension of a company’s authority to do business in the State of New York.

Does my LLC need a registered agent?

A registered agent is required when you start an LLC or register to transact business in another state (a process called “foreign qualification”). Alpha includes Registered Agent Service with its incorporation service packages

Ensuring your privacy. When a company is served with a Service of Process, it is often delivered by local law enforcement. Most business owners do not want police officers showing up in front of customers, employees, or neighbors (in the case of a home-based business), to serve them notice that their company is being sued. Having Alpha as your Registered Agent Service Provider ensures you receive any Service of Process promptly and privately.

Maintaining a registered office and normal business hours. The Registered Agent for a business must be available during normal business hours to accept important documents as they are delivered. If you set your own hours, or you are often away from your office or home-office, having Alpha as your registered agent ensures that you never miss these important communications.

How do I ensure my LLC always has a Registered Agent? 

Our LLC Formation Service packages include six months of Registered Agent Service. As your Registered Agent, Alpha fulfills your state’s legal requirement and provides ongoing compliance assistance for your business. You not only receive our Registered Agent Service for 6 months free with your incorporation package order, but you also avoid interruption of this valuable service with our convenient auto-renewal program. 

How do I get started setting up a limited liability company (LLC)?

After you decide to form an LLC, Articles of Organization LLC forms must be filed, and state and initial fees must be paid. Alpha’s LLC Formation Service packages handle these steps for you.

After your LLC forms are filed, it is recommended that your LLC hold an organizational meeting of the members/managers. This meeting will help to start an LLC by adopting an operating Agreement, issue membership interest certificates to members, and undertake other preliminary matters such as authorizing the opening of a bank account for the LLC. View our article on Business Compliance Requirements to learn more.

What is Rush Filing Service?

Alpha’s Rush Filing Service for LLCs allows you get an LLC incorporated quicker by decreasing your incorporation filing timeframe to 24 to 48 hours in certain states.

Is LLC Rush Filing Service available for every state?

No. Alpha’s Rush Filing Service for LLCs is available in some states. The turnaround time adjacent to each state is the time it will take us to receive verification that your LLC forms have been filed with the state, following the name approval or consent. The time frame excludes weekends and holidays. Total time for receiving your state-approved incorporation documents from the state and returning them to you may take around a week after verification.

How soon will I receive my documents when I select Rush Filing Service?

The 24- or 48-hour filing time is for the LLC formation only. It typically takes longer for the states to produce the filed incorporation documents. Once Alpha receives your documents from the state, we will ship them to you via FedEx Overnight delivery. This means you should have your documents in hand anywhere from just a few days to one week after filing. We will also scan them into our Online Status Center, making them available to you before you receive your original documents to help get an LLC started as quickly as possible.

Note: Some states require your signature on the incorporation documents when someone other than Alpha is acting as registered agent. In these cases, the filing timeframe of 24 to 48 hours begins after we have received the signed documents and received any applicable prior approvals or consent.

Why should I include Rush Filing Service with my LLC incorporation service?

Using Alpha’s Rush Filing Service secures your LLC’s name and filed date in as little as 24 hours. Our Rush Filing Service is particularly valuable when you need to get an LLC incorporated quickly or need proof of your LLC’s incorporation to secure a contract or to open a bank account