Incorporation documents are legally certified documents that establish the formation of a corporation and outline its legal structure, constitution, and formation. They are filed with the appropriate government authority, usually the secretary of state. The articles describe the corporation: its name, who owns it, contact information, and any details about its shares of stock.
The incorporation documents you'll need will vary depending on the type of private practice you own.
For S Corporation
- You'll need to have Form 2553 - this is the form you file to be elected as an S Corporation for federal tax purposes.
- You'll need to have Form CP261- this form indicates that the IRS has accepted your S Corporation election per Form 2553, Election by a Small Business Corporation. If you misplace your CP261 letter, you can call the IRS and obtain a 385c verification letter to confirm your tax filing status.
It is important to note that S-corporation is a tax entity. A tax entity refers to how a business is classified by the IRS or other tax authorities for tax purposes. It defines how the business's income, expenses, and profits are taxed. Importantly, a business’s tax entity is not necessarily tied to its legal entity type; it may be treated one way legally but elect a different classification for tax purposes.
For Sole Proprietors
Sole proprietors aren’t required to have an employer identification number if they don’t have employees. Instead, they can generally use their Social Security number or Individual Taxpayer Identification Number when filing their business taxes. Below are the reasons why obtaining an EIN would be required for Sole Proprietors:
- You have employees.
- You bought or inherited your business.
- You have a Keogh plan or a solo 401(k) retirement plan.
- You file for bankruptcy.
It is important to note that Sole proprietors would not have any incorporation documents as they are not a legal entity. Sole Proprietors that incorporate as a single member would be classified as a single-member LLC for legal purposes. The tax filing for a Sole Proprietorship and a single-member LLC are the same.
For PLLCs or LLCs ( that aren't filing taxes as an S Corp)
PLLCs or LLCs that are not taxed as an S-corporation are either a single member LLC/PLLC or are a partnership (file form 1065) if they have more than one member. The incorporation of a PLLC/LLC requires an entity to incorporate with their respective state.
Incorporation documents include:
- Articles of incorporation
- EIN Letter
- LLC/PLLC operating agreement