Company FormationWhen registering a company, C corporation or C corp is the most commoncorporation type, but it isn’t alwa...
loss is reported on the owners’ personal tax returns, and any tax due is paidat the individual level.S corp advantagesMany...
as an LLC. These benefits are, in many cases, unavailable to soleproprietorships and general partnerships. Creating an LLC ...
LPs are especially appealing to businesses where a single, limited-termproject is the focus—such as the film industry, real...
corporate features.*A BVI company can re-quire and re-issue their own shares.*Shares can be issued for a consideration oth...
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Starting A Company: TopAUM.com company formation explained

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Starting A Company: TopAUM.com company formation explained

Tyler Capital Group, LLC,
Hedge Fund Solutions

www.TopAUM.com
www.TylerCap.com





capital raising,incorporating,launch company,small business,start,starting a company,topaum, Hedge Fund Startup, Hedge Fund, Launching a Hedge Fund, Scott Lanziotti, Jonathan Buffa, Tylercap.com, Tyler Capital Group, Hedge Fund Jobs

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Starting A Company: TopAUM.com company formation explained

  1. 1. Company FormationWhen registering a company, C corporation or C corp is the most commoncorporation type, but it isn’t always the top choice for small businessowners. C corporations provide limited liability protection to owners, who arecalled shareholders, meaning owners are typically not personally responsiblefor business debts and liabilities. C corporations may also offer greater taxadvantages because of an expanded ability to deduct employee benefits,which are most often used by growing businesses.  C corp advantagesC corporations typically provide a number of advantages: • Limited liability protection. Owners are not typically responsible for business debts and liabilities. • Unlimited owners. C corps can have an unlimited number of shareholders. • Easy transfer of ownership. Ownership is easily transferable through the sale of stock. • Unlimited life. When a corporation’s owner incurs a disabling illness or dies, the corporation does not cease to exist. • Raise capital more easily. Additional capital can be raised by selling shares of stock. • Credibility. Corporations may be perceived as a more professional/ legitimate entity than a sole proprietorship or general partnership. • Lower audit risk. Generally C corporations are audited less frequently than sole proprietorships. • Tax deductible expenses. Business expenses may be tax- deductible. • Self-employment tax savings. A C corporation can offer self- employment tax savings, since owners who work for the business are classified as employees.WhychooseanScorporation?S corps are corporations that have elected a special tax status with the IRS.S corporations provide the same limited liability to owners (calledshareholders) as C corporations, meaning that owners typically are notpersonally responsible for business debt and liabilities; however, Scorporations have pass-through taxation. S corporations do not pay tax atthe business level. They file an informational tax return but business income/
  2. 2. loss is reported on the owners’ personal tax returns, and any tax due is paidat the individual level.S corp advantagesMany small business owners form a corporation and elect S corp status forpass-through taxation. Other typical advantages include: • Limited liability protection. Owners are not typically responsible for business debts and liabilities. • Easy transfer of ownership. Ownership is easily transferable through the sale of stock. • Unlimited life. When a corporation’s owner incurs a disabling illness or dies, the corporation does not cease to exist.  • Raise capital more easily. Additional capital can be raised by selling shares of stock. • Credibility. Corporations may be perceived as a more professional/ legitimate entity than a sole proprietorship or general partnership. • Lower audit risk. Generally S corps are audited less frequently than sole proprietorships. • Tax deductible expenses. Business expenses may be tax- deductible. • Self-employment tax savings. An S corp can offer self-employment tax savings, since owners who work for the business are classified as employees. ScorporationownershiprestrictionsPer IRS guidelines, S corporation owners (shareholders) must meet thefollowing criteria: • Number 100 or less. • Must be US citizens/residents (cannot be non-resident aliens). • Cannot be C corporations, other S corporations, limited liability companies (LLCs), partnerships or certain trusts.Why choose an LLC?LLCs provide limited liability protection to their owners (called members).Typically, owners are not personally responsible for business debts andliabilities of the company so creditors cannot pursue owners’ personalassets to pay business debts.Advantages of an LLCBusiness owners stand to gain many benefits when they register a company
  3. 3. as an LLC. These benefits are, in many cases, unavailable to soleproprietorships and general partnerships. Creating an LLC typically providesthe business owner with the following advantages: • Limited liability protection. Owners are not held personally responsible for business debts and liabilities. • Pass-through taxation. Typically LLCs do not pay taxes at the business level. Income/loss is reported on the owners’ personal tax returns and any tax due is paid at the individual level. • No ownership restrictions. LLCs do not face restrictions on the number or type of owners. • Flexible management. Owners have flexibility in structuring company management. • Fewer ongoing formalities. LLCs have less annual paperwork than, and do not face the meeting requirements imposed on C corporations and S corporations. • Credibility. LLCs may be perceived as a more legitimate business than a sole proprietorship or general partnership. • Consent to add owners. Written consent of LLC members must be obtained prior to increasing ownership in the company or adding new owners.Whychoosealimitedpartnership?A limited partnership (LP) is similar to a general partnership while still offeringlimited liability protection to some of the partners. In an LP, at least onepartner must be a general partner with unlimited liability, and at least onepartner must be a limited partner whose liability is limited to the amount ofhis or her investment. Limited partners act as “silent partners” making acapital investment much like passive shareholders in a publicly tradedcorporation but having no involvement in the management decisions of thebusiness.An LP allows for pass-through taxation, as its income is not taxed at thebusiness level. Income or losses are reported on the partners’ tax returns,and any tax due is paid at the individual level. Limited partners can uselosses to offset other passive income on their tax returns. General partners’losses can be used to shelter other income up to the value of theirinvestment in the partnership, since their losses are not usually consideredpassive.Advantagesofalimitedpartnership
  4. 4. LPs are especially appealing to businesses where a single, limited-termproject is the focus—such as the film industry, real estate or estate planning.Advantages of LPs typically include: • Limited liability protection. Limited partners are not typically held responsible for business debts and liabilities. • Pass-through taxation. Income tax is not paid by the business. Profits/losses are reported on the partners’ tax returns, and any tax due is paid at the individual level. • Control over day-to-day operations. General partners have full control over all business decisions. • Flexible management. Partners have more flexibility in management structure. • Fewer formal requirements. LPs face fewer formal requirements and paperwork than corporations. • Additional source of investment capital. Adding limited partners provides additional sources of investment capital. OffshoreCompanyFormationBritish Virgin Islands (BVI) isconsidered one of the oldest and mostrespected offshore financial centres in the world. Currently there are over480,000 registered companies as compared to the Cayman with only 85,000.ThemainconsiderationsforformingaBVIcompany:* Maximum security of assets includes the ability to transfer domicile* The directors may protect the assets of the IBC for the benefit of the IBC,its creditors and its members by transferring its assets to another company,trust, foundation, association or partnership; and merge or consolidate withany other company or foreign corporation in another accommodatingjurisdiction.* International Business Companies are exempt from all local taxes andstamp duty* Maximum, confidentiality and anonymity are provided by BVI bearer sharesbeing available by the absence of any requirements to file any organizationalor accountancy information with the Registrar of Companies, (other than thememorandum of Articles of Association), and by share registers beingavailable for inspection only by company registered shareholders or by orderof the BVI court.* Ease of operation, maintenance and control are facilitated by flexible
  5. 5. corporate features.*A BVI company can re-quire and re-issue their own shares.*Shares can be issued for a consideration other than cash, with or withoutpar value, and be denominated in any currency.* Only one subscriber and thereafter one shareholder is required.* Single directord are permitted.* Shareholders and directors meetings are not confined to the British VirginIslands.* Books of account, records and minutes can be maintained outside the BVI.* There is no statutory requirement to hold annual general meetings.* BVI Business Company offers greater offshore asset protection benefits.* The BVI government is stable.UsesforaBVIBusinessCompany:A variety of application are possible with a BVI Business Company,including investmenst, property holding, financial management, trading andcopyrighting and/or licensing. Unlike many other jurisdictions, there are nodisclosure requirements, nor any minimum capitalization regulations, nor anyprohibitive license fees pertaining to trust and trustee companies forapplication in private-label trust company, unit and mutual fund situations.CostEffectiveFormation is less expensive as compared with the more traditional centerssuch as Bermuda, Cayman, Liechtenstein, Luxembourg, and Switzerland.

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