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If you are going to start a small business you must decide its legal structure. This is usually determined by the type of business, the number of owners or investors you have and how tax issues and responsibility are best handled. After the formation of the company, it is most likely to use an abbreviation, such as “Inc.”, after the name of your business. Some commercial terms are commonly used to save space in business correspondence.
What does Inc. mean
“Inc.” It is short for Incorporated. A corporation is a legal entity separate from the person or persons who form it. Directors and officers buy shares of the company and are responsible for its operation. The constitution of the company limits the responsibility of a person in case of a lawsuit. The corporation, as a legal entity, is responsible for its own debts, pays taxes on its income and can also sell shares to raise money. A corporation is also able to continue as an entity, after the death of a director or the sale of securities. A corporation is formed according to state law, through a request to the secretary of state and submitting the deed of incorporation. Because corporations are more expensive to manage and are legally complex, the US Small Business Administration recommends that small businesses not become corporations unless they have become a large company. In most states, companies must add a company name, such as “Inc.” After your business name.
What does Ltd. stand for
“Ltd.” is the abbreviation for limited or limited liability company. This structure is used mostly in European countries and Canada. In a limited liability company, directors and shareholders have limited liability for the debts of the company, as long as the company operates within the law. Its directors pay the income tax and the company pays the corporate income tax. The liability of the company’s debt is limited to the amount that a person has invested in the company. A limited liability company can be set up in four different ways. In some companies, shareholder liability is limited to specific predetermined amounts, drawn up in a memorandum. These companies are known as ”
Co.
“Co.” It is a company abbreviation, a wildcard phrase for an association of people who work together in a commercial or industrial company, for example in a sole proprietorship, limited liability company or corporation. For example, while Microsoft Corporation is located in the state of Washington, it is one of the many companies located there. Co., or company, has no meaning as a specific legal structure on its own.
LLC
“LLC” means “limited liability company.” An LLC brings together some of the characteristics of both business associations and corporations, although it looks more like an association. The owners, also called “members”, are protected from liability, but the profits and losses of the company go through the owners, who report them on their income taxes. This makes its structure less complex than that of a corporation, but as such, limited liability companies must offer values. Members share earnings as they wish. Members are considered self-employed and must pay taxes as self-employed. When a member of an LLC leaves her, the business dissolves and the remaining members decide if they want to start a new business. An LLC is also formed according to state law, through the request for the secretary and the presentation of state statutes. The limited liability company must also indicate in its name that it is an LLC or limited liability company.