Whether you’ve bought an existing business or plan to set up a new business, you first need to determine which type of company is right for you. There are a few things to consider here if you determine whether you are an LLC, a business of S, a C or a DBA register.
A DBA file requires an undertaking to deal with an alternate name, often referred to as an implied or fictitious business name. This is typically filed at the county level, but some countries have DBA files at state level. The name of the organization is the same as the name of the company or shareholder, unless the DBA is registered. I, for example, am the sole owner of a landscaping company. To order to operate as my landscaping company, I have to file a DBA.
A corporation or LLC may also request a DBA in order to operate under a name other than the name registered with the State (when a company has been incorporated). For example, corporation may want to make business under a name which more clearly indicates what the company’s actions are and can file a DBA to use a descriptive name.
Common documents— corporate information of incorporation and organizational details for LLCs — must be sent to the relevant state agency to incorporate the business as a C corporation, a S company or an LLC. It helps protect personal assets because unlimited liability is imposed on sole ownership and companies that use DBA.
Next, think about it and decide which business model is right for you to formalize your organization.
A corporation is a separate legal entity formed under the law of the State that protects owners ‘ (shareholder) assets against creditors ‘ claims. Automatically, you become an ordinary company or “C” by entering your business. A C company (or a B company) is a separate investor and pays the corporation’s income and expenses and not its proprietors. If company profits are then distributed as dividends to owners, the proprietors have to pay the distribution personal income tax, creating a “double tax” (profits are first taxed at a corporate level and then again at a personal level as dividends). Because of this element, many small businesses do not choose C corporations.
The moment you’re registered, you’re able to choose S corporation status through submitting an IRS Form and, if necessary, by submitting a tax return (the S Corporation does not charge a fee) to you so that income, loss and other tax things are passed to you through the Corporation.