Why form a Virginia Corporation?
There are numerous reasons why it is important to file a corporation for you company. The biggest and most common reason people set up a corporation is for the liability protection. This liability protection prevents your personal assets from being attacked in a lawsuit should your company be sued. The simple formation of the corporation creates a separate legal entity away from the individual. Therefore the shareholders, owners, and directors are not responsible for any obligations or debts of the corporation.
Officers of a Corporation:
Generally each corporation will have as officers of the corporation a President, Secretary, Treasurer and Director. In most cases, one individual will be starting their corporation from a sole proprietorship, therefore all states do allow for one person to take on the role of all the officer position for a corporation.
Naming your Corporation
A Corporation must contain, in their name, the word Corporation, Incorporated, or limited or an abbreviation. A corporation may not assume the same name as an existing LLC or Corporation. The company name is not distinguishable by differences in punctuation, conjunctions, or prepositions. Also, the name is not distinguishable by using different legal descriptions such as Inc vs. Corp vs. Incorporated etc. There may be cases where the name is rejected for the company name being too similar to that of another entity. There also may be words such as “bank”, “insurance”, and other words that are regulated and require prior approval for its use as a business name.
Do I need a Registered Agent?
What is a registered agent and do I need one is a question many individuals like you are asking themselves. The simple answer is yes, every state does require an individual to serve as a registered agent. If an individual is unable to serve as a registered agent, you can hire a company to provide registered agent services for you.
The role of the registered agent is simple. The Secretary of State must have an individual or company to serve process to. In the event of a lawsuit, the Secretary of State must send these legal documents to the registered agent. Therefore it is important to have a reliable registered agent. In most cases, the person setting up the corporation can serve as their own registered agent as long as they are over 18, a resident of the state and is willing to do so.
C Corp vs. S Corp
The difference between the C and S corp status is that the S Corp is a special filing status set up by the IRS to allow for pass through taxation to mimic the same tax structure of a LLC. By default, all corporations are listed as C Corps unless the S Corp filing is submitted. There are restrictions on the corporation to maintain this S corp status however.
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