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, including its name, ownership details, contact information, and any relevant information about its stock shares.
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, which is the form you file to elect S Corporation status for federal tax purposes.
- You'll need to have Form CP261, which indicates that the IRS has accepted your S Corporation election as 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 an 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 do not have any incorporation documents as they are not a legal entity. Sole Proprietors that incorporate as a single-member LLC would be classified as a single-member LLC for legal purposes. The tax filing for a Sole Proprietorship and a single-member LLC is 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 its respective state.
Incorporation documents include:
- Articles of incorporation
- EIN Letter
- LLC/PLLC operating agreement
What's the difference between articles of organization and articles of incorporation?
Both are types of legal documentation that are received after filing to create your business with the appropriate government authority, usually the Secretary of State. The major difference is the type of business entity created:
- Articles of organization include the certified documentation you receive after filing to form an LLC or PLLC.
- Articles of incorporation include the certified documentation you receive after filing to form a Professional Corporation.
*Often, the term S Corporation can be confused with a Professional Corporation. An S Corporation is a tax designation, not a legal entity. To read more about business entities and tax entities, please see: What is the difference between a Business Entity and a Tax Entity?
Why does Heard request these documents?
Heard will request copies of your business and tax entity documents to confirm eligibility requirements and ensure compliance with tax filing requirements.