New Hampshire Startup
If you're forming a business as a New Hampshire startup, you're probably aware that
there are a few different types of business entities available to you. While all
of these types of businesses are registered with the Corporate Division of the New
Hampshire Secretary of State's office, there are a few differences that you should
be aware of, as inadvertently choosing the wrong organization type for your business
can negatively impact your bottom line.
Below, our New Hampshire Startup page discusses each of the main entity types available—Trade
Names, Corporations, LLCs, and Nonprofit Corporations—as well as how an existing
corporation outside of New Hampshire might become authorized to do business in the
state. Links are provided to further resources.
We hope the information below helps clarify the main points so that, along with
your accountant or lawyer, you can make the best decision possible for your new
business!
New Hampshire Trade Name
Known as a DBA in some other states, a New Hampshire
Trade Name is registered with the Secretary of State's office (as compared
with many other states, where Trade Name filings are registered with the County
Clerk or County Register of Deeds).
A Trade Name or DBA is a type of business that means that an individual (known as
a Sole Proprietor), partnership, corporation, or other entity type is "doing business
as" another name in New Hampshire.
This type of business does not provide limited liability protection to its
owner. In other words, if a New Hampshire trade name is sued for defaulting on a
loan, there is no legal protection for the owner, and the courts may order him or
her to pay the debt from his or her personal accounts.
Incorporate in New Hampshire
By contrast,
incorporating in New Hampshire provides limited liability to the owner or
owners in cases where the corporation defaults on a debt or legal action is taken
against it.
Note: The legal separation of corporation and owner is known as a
corporate veil, and the courts can pierce the corporate veil in cases where
the corporation or owner has acted improperly (provided unreasonable compensation
for executives that own stock in the company, mingled corporate and personal assets,
and failed to keep detailed and accurate records of the company's business, for
example).
For-profit corporations will choose one of two tax classifications at the federal
level: C corporation, or S corporation. A
C corporation has a flexible structure but the highest tax responsibilities;
an
S corporation provides less ownership flexibility, but it is a pass-through
entity that avoids the double-taxation of a C corporation.
New Hampshire Foreign Corporation
If you have already incorporated in a different state but you would like to open
an office or do business in New Hampshire, a
foreign corporation filing is required. The appropriate document to file
a New Hampshire foreign corporation is the Application for Certificate of Authority.
If you would like, you can submit an Application for Reservation of Name prior to
filing. If you do so, you must file your Application for Certificate of Authority
within 120 days of that reservation, or your reserved name will become available
for use.
New Hampshire LLC
An New Hampshire LLC,
or limited liability company, is a type of business that enjoys many of the same
benefits of a corporation: its owners (not surprisingly) have limited liability
protection against debts and losses of the business, it can be taxed as a pass-through
entity, and its corporate veil can be pierced by the courts if the business has
not been run properly.
"Limited liability company" is not a tax classification that is accepted by the
IRS. Rather, an LLC will select a tax classification from a few different structures,
depending on the amount of owners.
New Hampshire Nonprofit Corporation
A nonprofit corporation
is one that is organized for religious, scientific, charitable, or other purposes
that are not for the financial gain of the shareholders (as with a for-profit corporation).
Nonprofit corporations do not raise money by selling shares, like for-profit corporations.
Instead, they rely on donations, fundraisers, and other nonprofit methods of raising
money for the organization.