1. CHOICE OF ENTITY CHRIS HAZLITT* FAEGRE & BENSON LLP
*WITH GENEROUS ASSISTANCE FROM SUSAN MORLEY

2. Entity Choices Sole Proprietor C Corporation S Corporation
Limited Liability Company
Single Member LLC

3. Filed Documents Sole Proprietor – None
C Corporation – Articles of Incorporation
S Corporation – Articles of Incorporation and S Corporation Election (Form 2553)
LLC (both) – Articles of Organization

4. Governing Documents Sole Proprietor – None
C Corporation and S Corporation – Articles of Incorporation, Bylaws, and Shareholder Agreement
LLC – Articles of Organization and Operating Agreement
Single Member LLC – Articles of Organization and short form Operating Agreement

5. Names Sole Proprietorship – No requirement
C Corporation and S Corporation – “Corporation” (or “Corp.”), “Incorporated”(or “Inc.”), “Company” (or “Co.”), “Limited” (or “Ltd.”)
LLC – “Limited Liability Company” or “LLC” or “Limited”

6. Designation of Owners Sole Proprietorship – Owners
C Corporation and S Corporation – Shareholders
LLC - Members

7. Liability Protection Sole Proprietor – None (unless insured)
C Corporation and S Corporation – Limited personal liability unless corporate veil is pierced
LLC – Limited personal liability unless “corporate” veil is pierced

8. Piercing the Corporate Veil
Failure to observe corporate formalities
Commingling business funds with personal funds
Single business entity theory

9. Types of Owners
C Corporation – No limitation on types of persons who can be shareholders
S Corporation – Only individuals, estates, and certain trusts can be shareholders; individuals must be US citizen or US resident
LLC – No limitation on types of owners except individuals must be 18 years of age

10. Number of Owners C Corporation – No limitation
S Corporation – Cannot have more than 75 shareholders
LLC – May have as few as one member

11. Equity
C Corporation – May have different classes of stock with different voting and economic rights (including stock options and stock warrants)
S Corporation – Cannot have more than one class of stock, but may have nonvoting stock
LLC – May create any economic and management relationships

12. Taxation Sole Proprietor – Schedule C (Form 1040)
C Corporation – Separate taxpayer (Form 1120)
S Corporation – Flow through taxation (Form 1120S and Schedule K-1)
LLC – Flow through taxation (Form 1065 and Schedule K-1)
Single Member LLC – Schedule C

13. Compensation Sole Proprietor – Self-employment income
C Corporation – Salary subject to employment tax and withholdings; excess as dividends
S Corporation – Salary subject to employment tax and withholdings; “dividend” loophole
LLC – Self-employment income (no withholdings); make estimated tax payments
Single Member LLC – same as sole proprietor

14. Miscellaneous Intellectual Property Patents
Colorado Business Registration
Taxpayer Identification Number
Payroll
Insurance
Annual Reports
Secretary of State – Online filings
Annual Meetings/Minutes

15. Pitfalls to Avoid

16. Keys to Success

17. QUESTIONS?

18. CHOICE OF ENTITY CHRIS HAZLITT* FAEGRE & BENSON LLP
*WITH GENEROUS ASSISTANCE FROM SUSAN MORLEY