What is Entity Creation?
Entity Creation is the process of establishing a legal business structure, such as a corporation, limited liability company (LLC), or other formal entity. This involves filing the necessary formation documents with the relevant state or federal authorities to officially recognize the business as a legal entity. Once created, the entity may be required to comply with various legal and regulatory obligations, including Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA).
Key steps in Entity Creation include:
- Filing formation documents: Submitting articles of incorporation (for corporations) or articles of organization (for LLCs) with state authorities.
- Choosing a business name: Selecting a unique name that complies with state guidelines.
- Appointing directors or managers: For corporations, directors must be appointed; for LLCs, managers or members.
- Complying with BOI reporting requirements: Depending on the type of entity, reporting the names, addresses, dates of birth, and ownership percentages of beneficial owners to FinCEN.
Entity creation is the foundation of a company’s legal existence, and complying with BOI reporting ensures transparency and adherence to regulations.
