Corporations are separate legal entities. They are normally formed by one or more individuals with the filing of Articles of Incorporation at the Secretary of State’s office. Normally an initial franchise tax or filing fee needs to be paid (Illinois is currently $150.00).
Prior to Incorporation, Corporate names are normally reviewed to ensure that no other corporation has filed that name in the State. Correspondingly, “national” or “brand” names cannot be used.
Once the Corporate Charter is received, stock certificates should be issued and in Illinois, the Corporate Charter is required to be filed with the clerk of the county in which the Corporation’s offices are located (Normally an $18.00 to $30.00 fee).
Once the filings are complete, the corporate officers should file for a Federal Employer identification number (FEIN), register the corporation with the state Department of Revenue and also register the corporation with the state unemployment department.
As we will discuss, regardless of whether the corporation is a, “C” Corporation or an “S” Corporation and, regardless of size, the corporation will either want to pay or will be required to pay, its officers as employees.
Both “C” & “S” corporations can have “Home” offices, however a rent must be paid by the corporation to the individuals and only a percentage of interest and real estate taxes can be deducted against that income. No other expenses are deductible against the rental income.