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Business Law FAQ's

Q:  What is the difference between a Limited Liability Company (LLC) and an S-Corporation?
A: When it comes to tax regulations, the two are usually quite similar with the exception of Limited Liability Companies being heavily taxed when yearly revenue exceeds $250,000 and then once more if it exceeds $1,000,000. There are no restrictions with shareholders and Limited Liability Companies, however, whereas an S-Corporation is restricted to 75 shareholders.

Q: What is the difference between an S-Corporation and a C-Corporation?
A: Generally, corporations start off as C-Corporations before the business owner has the option to change to an S-Corporation. The difference between the two involves taxes, and can be discussed in greater detail with a qualified business law attorney.

Q: What is the “alter-ego” or “piercing the corporate veil” theory?
A: In certain situations, courts have permitted plaintiffs to pursue the possessions of the company’s owners to fulfill a judgment against the business. This defeats the personal liability defense that business owners naturally take advantage of when the business has met its legal requirements. Some situations in which the courts may permit the plaintiff to “pierce” the defendant’s “corporate veil” include, fraud or intermingling of a business owner’s and company funds, failure to meet legal business regulations, acts in which the business can be no longer be looked as a another entity but is instead acting as the owner’s “alter ego,” and in some cases, undercapitalization.

Q: What is a registered agent?
A: Almost all states enforce the law that corporate organizations have a registered agent in the state in which they conduct business. This agent must be a physical address and presence that is available during typical business hours. No P.O. boxes are permitted to serve as a registered agent. 

Q: Am I required to obtain permission to run a company in a different state when I am already incorporated in another state?
A: Yes, this is required, even if you are already registered in a state, since each state has its own regulations.

Q: What type of business qualifies as a non-profit corporation?
A: A non-profit business is a corporation that is operated solely as an educational, charitable, religious, scientific, or literary purpose. A non-profit corporation does not owe either federal or state taxes since the government deems the company’s purpose to be beneficial for society.