The Bylaws for a corporation or the operating agreement for a limited liability company (“LLC”) set forth the rules for operating the entity. These documents are not filed with the State Corporation Commission and can be amended at any time by the business owners without having to file anything with the Commission. We provide operating agreements for LLCs and bylaws for corporations under two of our three plans for each kind of entity.
You must check with your tax advisor to determine which entity is best suited to your needs from a tax perspective. The S Corporation and the C Corporation are both corporations under Virginia law, but differ in their tax consequences under the Internal Revenue Code.
The Virginia State Corporation does not differentiate between the S and C Corporations. The default status of a corporation under the Internal Revenue Code is the C Corporation. To achieve S Corporation status, you must file an election form with the Internal Revenue Service. Again, you must check with you tax advisor to determine if one form of a corporation is better for you than the other or if you should choose an LLC.
If you choose the LLC, we provide different operating agreements for a single member LLC and for a multi-member LLC. A single member LLC operates like a sole proprietorship, while the multi-member LLC operates like a partnership. As a result, the operating agreements are somewhat different.
The multi-member operating agreement is more complex because the operation of a partnership is more complicated than the operation of a sole proprietorship.