STATE FILINGS NEEDED TO FORM A BUSINESS

In order to form a corporation or limited liability company (LLC), you must file a document with the Secretary of State. Although the format of the documents from state to state is generally the same, states differ in the names of the documents. For example, in California, the document to form a corporation is called the Articles of Incorporation, and the document to form an LLC is called the Articles of Organization. In Texas, the document is called the Certificate of Formation in the case of both corporations and LLCs.

By filing the required documents, you will be providing the state with basic information about the company. Such information will include the name of the company, the company's purpose, the name and address of the organizer, the name and address of the registered agent, the names and addresses of the directors/members, and information about shares to be issued (if any).

If you are forming a partnership, no state filings are required to form a general partnership. However, if the liability of one or more partners will be limited (i.e. a limited partnership), formation documents are required to be filed with the state. In addition, all partnerships are required to file a tax return every year.

The Franchise Disclosure Document (FDD)

A Franchise Disclosure Document (FDD) is a legal document given to prospective buyers of a franchise. The purpose of the FDD is to provide the prospective buyer with essential information about the franchise. Since the purchase of a franchise requires a significant investment, it is important for the buyer to have extensive information about the franchise so the buyer can make an informed decision about whether or not to invest in the franchise.

FDD’s are generally several hundred pages long. FDD’s will include background information about the franchisor, fees the franchisee will be required to pay, a list of the franchisee’s obligations, any exclusive territory that comes with the franchise, a description of the assistance the franchisor provides franchisees, copies of contracts the franchisee will be required to sign, financial performance expectations, and more.

A prospective franchisee must receive the franchisor’s FDD at least 14 days before they are asked to sign any contract or pay any money to the franchisor. The franchisor may provide the franchisee a copy of its FDD on paper or in electronic format such as on a disc or via email.

WHAT IS A 501(c)(3)?

You may have heard someone say that their company is "a 501(c)(3)." But what does that mean?

501(c)(3) is a section of the Internal Revenue Code. It refers to a certain type of nonprofit company.

A nonprofit company (also called a not-for-profit company) is one that has been organized for a nonprofit purpose (such as a charitable purpose). A 501(c)(3) is a nonprofit company that has gone through the additional steps necessary to become recognized by the IRS as a charitable organization.

The biggest benefit of a 501(c)(3) is its tax-exempt status. A 501(c)(3) is exempt from various taxes such as federal tax, sales tax, and property taxes.

Another benefit is tax-deductible contributions. People who make charitable donations to a 501(c)(3) are able to take a tax deduction for the amount of the contribution.