Articles of Organization Filed Online with LegalShield Attorneys

While C corporations and S corporations are similar in how they operate, they differ in their taxation. In forming your corporation, these tax considerations are often a big factor when choosing a structure.

C corporations pay tax on corporate profits, and its shareholders are taxed on the dividends paid out.

With an S corporation, profits and losses are passed through to the shareholders to be reported, and if applicable paid, on their personal tax returns, similar in some respects to default LLC taxation.

C corporation is the default; a corporation may elect S corporation status through a filing with the IRS.

Each state’s website should have a standard form for Articles of Organization to be filed, along with a fee for filing. It’s a somewhat similar process if you are launching an LLC as there is a standard form to register. However, the Articles of Organization do not include the ‘how to’ of running the company, like you would find in an LLC’s operating agreement. For corporations, those details are within company bylaws, which, like an LLC operating agreement, is not a public document.

Your corporation’s Articles of Organization, along with corporate Bylaws, serve to define its structure and function in a way that allows you to account for possibilities or eventualities.

For example, you may wish to seek outside funding to help grow your business; your Bylaws should provide for how shares in the corporation can be issued or sold to investors. Similarly, one of the members of the corporation may wish to leave or get divorced, or even die, or you may simply want them to leave; shareholder agreements outline how that person’s shares may be bought back and may limit the option to sell to an outside third party.

A lawyer will be familiar with these situations and the many challenges that can arise and can advise you on the proper steps.