A corporation is a legal business entity which is given many of the same legal rights as an individual. Corporations are formed in order to grant the actual people involved in the business of the corporation limited liability protection. This limited liability protection is one of the many advantages to incorporating. A corporation is incorporated (or formed) under the laws of particular state or country. The corporation is then governed by the laws of that particular state or country. Corporations are owned by shareholders and a board of directors usually makes most of the major decisions.
A limited liability company or L. L. C. Is not a corporation.
Incorporate Definition of Incorporate by Merriam Webster
Although some individuals often incorrectly believe the abbreviation L. Stands for limited liability corporation, it does not. The abbreviation L. Stands for limited liability company.
A limited liability company does not have stockholders. It is composed of members. The members are the owners of the company and are usually considered the equivalent of stockholders. Please contact an attorney or an accountant to further distinguish between these two types of business entities and determine which type of business entity would better suit your needs.
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If you're involved in a fledgling, you and the other folks active in the group have probably wondered whether or not you should incorporate. Becoming a requires some paperwork, but for many groups, the benefits of nonprofit status outweigh the complications. Here are five circumstances that may make it worth your while to incorporate. If your group will make a profit from its activities, becoming a nonprofit corporation can yield a great benefit:
As long as the money you make is related to your charitable activities, your nonprofit corporation won't pay income tax on it. Better Books and Learning begins as a part-time effort by a few dedicated individuals to hold book groups for disadvantaged youth. The volunteers pay all of the expenses out of their own pockets, and the group never turns a profit. Then a board member of a local junior college asks the group to administer and run book groups as part of the college curriculum -- for a fee.
Since the group will now show a profit from its educational activities, it decides to incorporate as a nonprofit and seek with the IRS. For more information on whether income is related to your group's activities, and thus not taxable, see. Without tax-exempt status, your group is unlikely to qualify for many public and private grants. While you can form a nonprofit, tax-exempt association rather than a, qualifying for a tax exemption as an association is harder -- it requires preparing and adopting a complicated set of.
Further, it's generally easier to get the IRS to approve a tax exemption for a nonprofit corporation. If your organization becomes a tax-exempt nonprofit corporation, donors can to your group on their federal and state tax income returns. For Shore United wants to sponsor monthly cleanup drives to pick up and haul away trash left along the local bay shore. They've enlisted a number of enthusiastic volunteers, but they need funds to rent a truck, buy gas, and pay for volunteers' meals. Incorporating the group as a nonprofit corporation and applying for tax-exempt status can help them raise these much-needed funds.