What are the benefits of entities?

There are many advantages to using an entity management system. Your business changes over time through growth, laws and regulations, bylaws, new employees, and a litany of other reasons. It is important to have an entity management system to support your organizational growth and keep your organization in good standing with those laws, rules, and regulations.

An entity management system will provide your organization with the following benefits:

Centralized Entity Management

You can manage and quickly access your entities and required Secretary of State compliance data from a single location. This means that your employees don’t have to remember multiple passwords to login and access the information necessary to perform their jobs. It reduces confusion over which system to log into and where to save documents for future reference. Using a cloud-based entity management system allows your directors, officers, and staff members the ability to access information when they are onsite with a client or working remotely. Centralization reduces the risk of human error by replacing your manual processes with automated process. An entity management system provides your organization with structure, consistency, and a sole database for your information.

Automated Secretary of State Filing Alerts

An entity management system provides automated workflows that allow your employees to enter information that will flow into the appropriate county and state forms. The system will track your compliance deadlines and send notifications of upcoming due dates to individuals you have designated. Automation will make your organization more efficient, reduce risk of incomplete forms, save time by automating processes that previously required manually sorting through saved documents and having to wait for the upload process.

Direct Access to Your Entity Management System

An entity management system will allow your organization to appoint and resign directors, officers, and managers as appropriate as well as manage your shareholder information. You can edit information and the system will automatically create an audit trail tracking the changes and indicate who made the change. The entity management system will also allow you to assign permissions through a hierarchy of view only, contribute, and edit providing added security to your information.

Document Management System

An entity management system will provide you with document storage preventing confusion and saving time in locating your information. When your employees have a centralized location for the documents its easy for teams from other departments, like finance and accounting, to access information they need without having to disrupt the workflow of other employees. This provides a collaborative environment ensures only the current information is being used for all purposes.

Entity Reports & Search Capabilities

One of the most valuable aspects of using an entity management system is the ability to report internally and externally. When all your data is stored in one centralized location you can search for data based on a variety of filters like type, state, or standing. Your searches can include information like company contacts, owners, and shareholder information. You can export any or all your data through a solid reporting system.

Secure Entity Management Software

We would be remiss if we didn’t talk about the importance of the security provided through an entity management system. Regardless of the requirements being self-imposed by your organization or through cybersecurity laws, your entity management system will provide peace of mind in knowing that your data is safe and secure.

Corporate Filings Support

As your organization grows over time and laws, rules and regulations, and staff changes are implemented having an entity management system with a knowledgeable support staff to back you up is essential. You should never feel uncomfortable with, worry about, or grow frustrated over your entity management system; you should always have a friendly voice to walk through your concerns with you.

If you would like to learn more about Legalinc’s Entity Management Platform, call us at 866-757-5850 or schedule a demo.

What are other advantages of organizing as a corporate entity? Some of the advantages include the option to sell shares of stock to raise capital, tax benefits, and reduced risk for the owner(s) of the business.

The Corporate Form of Organization

A corporation is a legal business entity that has been formed under the laws of the state in which it will operate. Corporations have investors who buy shares of stock to show their ownership in the business. This legal entity exists separately and distinctly from its owners, who are referred to as the stockholders or shareholders.

A corporation is an artificial being that only exists under the contemplation of the law. When one or more individuals go through the process of incorporation, the first step is filing the articles of incorporation with the secretary of state's office in the state where the business will operate. Upon filing the articles of incorporation, the corporation is created. This document will outline the specific aspects of the business entity, including how it will be governed and structured, as well as its purpose.

The Secretary of State will review the articles of incorporation. Upon approval, the business will receive a certificate of incorporation, also called a charter, that authorizes the legal existence of the corporation. Those who file the articles of incorporation will then be responsible for collecting the initial investments from the shareholders. After collecting the investment, the business owners can issue shares of stock to the shareholders, which is evidence of the ownership interest in the corporation.

After issuing the initial stock, the next step is meeting with the shareholders. During this meeting, the shareholders should choose the members of the board of directors and adopt corporation bylaws. The board of directors is responsible for appointing the officers who will take care of the daily business operations. In small companies or start-up ventures, the incorporators may be the only shareholders. These incorporators may also serve as the members of the board of directors and become the officers of the business.

Which Structure Is Best for Your Business?

When starting a business, you will need to decide which formation is best for the needs of the company. Business entity options include:

• Corporation
• LLC
• Sole proprietorship

Choosing the right formation depends on your expectations, preferences, and situation, as well as how you want the business to grow.

There are two forms of corporations: S corporation and C corporation. Each has its own advantages and disadvantages. The most common form of incorporation is the C corporation, which is a separate entity that exits legally and is owned by its shareholders. Many of the publicly traded, larger corporations are formed as C corporations. Although C corporations are more common, S corporations offer several additional advantages, including an improved tax structure for the shareholders.

Advantages of a Corporate Structure

One of the advantages of structuring your business as a corporation is limited liability. The owners aren't personally liable for the business debts or legal action taken against the corporation. Instead, they are only liable for the amount they invested. Forming a corporation provides a shield against personal liability.

Corporations exist separately from their shareholders and owners. If a corporation is sued or has outstanding debts, A corporation is an entirely separate legal entity from its owners and shareholders. That means that in situations such as the company being sued or the corporation owing debts, neither the shareholders nor the owners will be personally held liable or responsible. However, some exceptions do exist. For example, a shareholder might have to sign a guaranty to take on corporate debt.

Shareholders in smaller companies may also be held responsible for corporate debt if their personal and business finances are mixed. If the owners of the business don't follow the legal requirements to keep the corporation in good standing, they could become liable for business debt or legal action as well.

A limited liability corporation, or LLC, is another option for business formation. This unique structure is legally authorized under state statutes. When you form an LLC, you must elect for treatment as a partnership, corporation, or individual for taxation. The option you choose may offer protection to the LLC owners, called members, from legal action or company debt.

If you need help with the other advantages of organizing as a corporate entity, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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