Does one get a license when one incorporates?

[sky]

I want to get a professional license for domaining business and website development of some sort, and I'm wondering if incorporating will do it, and if so, which type of corporation will be good for a very small business, C-Corp, S-Corp or LLC.

 

[DeenaEsq]

You can form a company with the state (which is a good idea because it protects you from liability, etc.) but generally a license to do business is registered with your local authority (city, town, county, etc.).

As far as how you want to form your company, I'd advise either an LLC or an S-Corp for their tax benefits. If you want more information on the topic, you can visit my blog at www.blog.ebusinesslawgroup.com.

Deena
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Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to create an attorney-client relationship in any way.

 

[IAmAllanShore]

http://www.avivadirectory.com/domain-law/

3. What Legal Entity Should I Use?

Many domainers started out with nothing more than a few hundred dollars and an internet connection. So when it came to spending time and money to create a separate legal entity, many domainers just chose to operate under the default legal form DBA, which offers no legal protection. Even now, many domainers remain confused about whether they need to form a separate entity, which one they should choose, and why. Unlike other issues in domaining law, thankfully the laws surrounding entity types are pretty straightforward.

What is the Law?

When you own domains yourself (as opposed to through a legal entity) your personal assets, such as your personal savings, car, etc., are at risk if something goes wrong. So for instance, if you’re being sued for a trademark violation and you lose the case, you could lose your personal assets as well as the company assets. Suffice it to say, forming a separate legal entity for your domaining company is important.

There are a few major options when deciding which entity to form, each of which has its drawbacks.

C-Corporation:

Most Fortune 500 companies are C-Corp’s, which leads many new domainers to believe that it is the right choice for them. For domainers, C-Corps just mean an extra layer of 15% taxes, and probably aren’t desirable unless your company is planning on going public (a.k.a. having an IPO) in the very near future.

General Partnership:

There’s two of you in the company and you call yourselves partners, so the logical choice is to form a partnership, right? Wrong. A general partnership is the ugly stepchild to the LLC and S-Corp, because in a general partnership there has to be one person or entity designated as the general partner. Whoever that is doesn’t get limited liability. Thus, if your company got sued and it was formed as a general partnership, the general partners’ personal assets (personal savings, car, etc.) would all be included in the pot of money that creditors or the people that sue you can get to.

S-Corp:

Given that a General Partnership or C-Corp aren’t likely the best choice for your domaining company, the real choice is between an S-Corp and an LLC. Both offer limited liability to all the members (unlike a General Partnership) and neither has an extra layer of tax (unlike a C-Corporation). S-Corp’s are advantageous because they allow the owners to allocate part of the company income to a salary and part as a profit distribution, whereas an LLC treats all company profits as salary. The distinction is important because a domainer’s salary is subject to a self-employment tax, whereas passive income isn’t. So if you think your company is going to make enough money that it would exceed a reasonable salary for you, and if you are already planning on having employees, which means you’re already going to prepare payroll tax returns, then the S-Corp may be the way to go.

Limited Liability Company (LLC):

LLC’s are the newest legal entities and they provide an advantage over S-Corp’s because you can allocate profits in your company differently than you allocate ownership interests. That means that if you want to keep 100% ownership of your company but give your employees a share in the profits you can with an LLC (but can’t with an S-Corp). They also have the advantage of requiring virtually no paperwork or technicalities like an annual meeting of the shareholders to remain in compliance. The downside is that all of your company profits are treated as a salary, which means you’ll be paying more in self-employment tax than you would under an S-Corp. For most one or two person domaining companies, LLC’s are the way to go. They offer as good of liability protection as any other form, have low tax obligations, and give you some flexibility in how you want to structure profits.

How to Stay Out of Trouble?

Never form a C-Corporation or Limited Liability Partnership unless you have good reason to do so and have checked with an accountant first. The administrative, legal, and tax problems from a small domaining company’s perspective make these pretty terrible options for most.

Always write up a reasonable long-term projection for your business before choosing your entity. Deciding which legal form is best for your company depends not only upon your current situation, but also on the future, and getting it right early is a lot better than trying to fix things later.

Consider that the choice between an S-Corp and an LLC is a technical one which depends a lot on whether you plan to have other employees or not. That means that before you decide between the two options you should figure out whether the people that work for you are considered “independent contractors” or “employees” (discussed below).

-Allan :gl:

 

[irving]

what if you are living here in the Philippines. Can we find some clients to do some business regarding making domains??