Why form a Maine Corporation?
Maine corporations are set up by an individual who wants the protection afforded to them with this legal filing. When a corporation is formed, it provides the individuals associated with the corporation liability protection of their personal assets from liability. Many individuals will file corporations for this reason. There are other reasons for filing a corporation such as tax liability and other aspects of business.
Helpful tips in naming your Corporation
A Corporation formed in the State of Maine must have as its legal designator “Incorporation”, “Corporation” or its abbreviation. A corporate name may not contain language implying or stating that the corporation is formed for a purpose other than that permitted by Maine statutes and the corporation's articles of incorporation. The corporate name must be distinguishable upon the records of the Secretary of State of any other entity. To determine whether or not a name is distinguishable, the Secretary of State punctuation, capitalization or special characters. Also, the Secretary of State will ignore legal designators such as “LLC” or “Inc.” in the name. Finally the Secretary of State will reject corporate names that are deemed obscene, inappropriately promotes abusive or unlawful activity, falsely suggests an association with public institutions and violates any other provision of the law of this State with respect to names.
Corporate ownership
The ownership of a corporation is by who owns the shares. Every corporation must have a certain amount of shares outstanding. It is a requirement for each corporation. The shares represent ownership. A corporation can sell shares of the company in order to raise capital.
The corporation should therefore have more than one share of stock outstanding. We recommend that a corporation have at least 1500. That is the amount we default to however there is no problem with issuing one share of stock but it limits you on how many shareholders there can be. With one share, there can only be one shareholder. Therefore only one owner.
S-Corp
One of the advantages of an LLC is that it has pass through taxation. This means that the LLC does not pay a tax rather it passes through the LLC to the owners of the LLC. A corporation by defaul is a C corp in which the corporation pays a tax and any profits distributed to the shareholders is taxed again. In essence, this is double taxation.
To avoid this double taxation, companies can elect to file a s corp file with the IRS. This filing allows the corporation to be treated like a LLC in terms of taxes. The tradeoff of this filing is that the corporation is limited to only 75 shareholders. The company can't grow beyond that and maintain a scorp status.
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