Frequently Asked Question


These questions and answers are important to potential
ARISE VIRTUAL SOLUTIONS INDEPENDENT CONTRACTOR AGENTS!

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1. What do I need to continue my registration with Arise Virtual Solutions?

2. Why does Arise Virtual Solutions only contract with LLC’s or corporations, and not with individuals?

3. What is a corporation?

4. What is a “limited liability company” ?

5. What are the differences between an “independent contractor” and an “employee”?

6. What do I need to start an LLC?

7. How are LLC's taxed?

8. What are the “tax considerations” for a “single-member LLC”?

9. What are the “tax considerations” for a “multiple-member LLC”?

10. What do I need to start a corporation?

11. How are corporations (“Subchapter C corporations”) taxed?

12. What are the “tax considerations” for a “Subchapter S corporation”?

13. What are the differences between a “limited liability company” and a “Sub S corporation”?

14. What is a “limited liability company,&rdqu o; a “sole proprietorship,” or a “partnership”?

15. What local business liscenses will I need?

 

Arise Virtual Solutions only contracts with LLC’s or corporations with a valid federal employer identification number (“EIN”). To continue your application process you will need to form an entity and obtain an EIN. We understand your desire to move quickly and we can do both for you, often within one hour or less. We will prepare, obtain and forward your entity documentation and your EIN to you as soon as possible. With your EIN in hand, you can then continue your application process with Arise Virtual Solutions without any further delay.

 Arise Virtual Solutions offers a unique opportunity to its independent contracted agents through an “independent contractor” relationship. This independent contractor relationship offers agents the independence and flexibility to choose their own assignments, to choose their own work hours, and to work from home. This independent contractor relationship differs from a normal employer/employee relationship.
Independent contractor agents are not employees of Arise Virtual Solutions and are not entitled to participate in any employee benefit or other plans or programs that Arise Virtual Solutions may choose to offer its employees from time to time. Arise Virtual Solutions must be careful to maintain this independent contractor relationship properly so that agents are not treated as employees. Arise Virtual Solutions has chosen to avail itself of a number of safe harbors to assure independent contractor treatment, one of which is contracting only with business entities, and not with individuals. 

A “corporation” is a business entity created by one or more owners (“shareholders” in corporate parlance) under state laws to conduct one or more lawful businesses. Corporations have been prevalent in every state. Even though the laws are generally similar from state to state, there are some variances. A corporation is a separate legal entity from its owners/shareholders. The corporation’s owners/shareholders are generally not personally liable for the debts of the corporation so long as the corporation formalities are followed. A corporation is governed by a board of directors, not by its shareholders, in accordance with the terms of its Articles of Incorporation and its Bylaws (or applicable state laws if there are no Bylaws). Corporations are created by filing its Articles of Incorporation with the applicable state.  Annual reports must be filed each year (usually by April 1 or May 1) to avoid late fees and eventual administrative dissolution. Generally, a corporation must register as a “foreign entity” if it conducts business in states other than its state of incorporation. See the questions below for a discussion of the tax considerations applicable to corporations, including the differences between Subchapter S versus Subchapter C corporations.

A “limited liability company” (“LLC” for short) is a business entity created by one or more owners (“members” in LLC parlance) under state laws to conduct one or more lawful businesses. An LLC with only one owner is referred to as a “single-member LLC” and an LLC with more than one member is referred to as a “multiple-member LLC.”  Every state now permits the formation of LLC’s. The laws are generally similar from state to state but there are variances. An LLC is a separate legal entity from its owners/members and its owners/members are generally not personally liable for the debts of the LLC so long as its formalities are followed. An LLC is governed by its member(s) or by its member-manager(s) in accordance with the terms of its Articles of Organization and its Operating Agreement (or applicable state laws if there is no Operating Agreement). LLC’s are created by filing its Articles of Organization with the applicable state. Annual reports must be filed each year (usually by April 1 or May 1) to avoid late fees and eventual administrative dissolution. Generally, an LLC must register as a “foreign entity” if it conducts business in states other than its state of organization. See the questions below for a discussion of the tax considerations applicable to LLC’s.

As an “independent contractor,” Arise Virtual Solutions is able to offer agents the independence and flexibility to choose their own assignments, to choose their own work hours, and to work from home. Since you choose your own hours, any “wage and hour” all considerations are between you and your LLC or corporation. Arise Virtual Solutions will not be responsible for overtime, sick pay, vacation, holiday, etc..
Arise Virtual Solutions will pay you, as an ‘independent contractor,” the full amount of your agreed fees without any “payroll withholdings or deductions.”  As an “independent contractor,” you are entitled to deduct business expenses attributable to your services, such as a home office, computer equipment, internet services, etc. These business expenses could reduce federal income, payroll or other taxes. Please consult your tax accountant for details.
As noted above, Arise Virtual Solutions will pay you the full amount of your agreed fees without any deductions for federal income tax, social security, Medicare, unemployment insurance, and other withholdings or deductions. Arise Virtual Solutions will not pay any employer contributions towards these items. As an “independent contractor,” you or your LLC or your corporation is responsible for payment of your own federal income tax, self-employment tax, Medicare, unemployment insurance and other withholdings and deductions. As noted above, business expense deductions available to you or your LLC or corporation may reduce the amount of your fees otherwise subject to some of these normal withholdings and deductions that employees pay. 
As an “independent contractor,” you are not an employee of Arise Virtual Solutions and you are not entitled to participate in any employee health, life, bonus, incentive, benefit or other plans or programs that Arise Virtual Solutions may choose to offer its employees from time to time. You must pay your own insurance or benefits if you choose to purchase them.

We have prepared an all-inclusive package of services with no hidden fees to get you started and tailored to your opportunity with Arise Virtual Solutions. We will prepare and file your Articles of Organization, prepare and obtain your federal employer identification number, prepare and file your Subchapter S election if needed, and prepare your organizational minutes and bank account resolution. This is everything you need to get started. Additional “bells and whistles” can be added by you at any time.

To understand how LLC’s are taxed, you must understand the different tax treatments of corporations and partnerships. The earnings of corporations are subject to “double taxation” without a Subchapter S election. Because a corporation is a separate taxable entity, its earnings are subject to tax. When the remaining earnings are distributed to its shareholders, those distributions are subject to tax a second time. Partnerships on the other hand are “pass-through entities.”  Partnership earnings are “passed-through” without tax at the partnership level so that such earnings are taxed only once at the individual partner level.  This difference between corporations and partnerships was eventually minimized by the “Subchapter S” election that was made available to certain “smaller corporations” and their shareholders. Corporations electing “Subchapter S” treatment were essentially treated as partnerships and their corporate earnings were “passed through”’ to be taxed only at the individual shareholder level. Over time, the restrictions applicable for corporations to achieve “Subchapter S” treatment were seen as too restrictive and the “limited liability company” was created to broaden the availability and flexibility of “pass-through” tax treatment. LLC’s that elect “disregarded entity’ or “Subchapter S” treatment “pass-through" their earnings without tax and such earnings are taxed only once at the individual owner level.

LLC’s are a unique creature under the federal income tax code and may be treated differently for tax purposes based upon certain factors and elections. A “single member LLC” will be treated as a “disregarded entity” unless its member files an election to be treated as a corporation (either as a Subchapter S or Subchapter C corporation). Treatment as a “disregarded entity” is generally the simplest and least costly since no corporate or Subchapter S election is required at formation and since earnings are reported on simpler Form 1040-Schedule C’s and no corporate tax return (Form 1120 or Form 1120S) is required

A “multiple- member LLC” will be treated as a “partnership” unless its members elect to be treated as a corporation (either as a Subchapter S or Subchapter C corporation). “Partnership” tax treatment can be complicated and generally it is simpler and more cost-effective for a “multiple-member LLC” to elect to be treated as a Subchapter S corporation. “Subchapter S” treatment is generally slightly more costly than a “disregarded entity” since a Subchapter S election is required at formation and since earnings are reported on a corporate tax return (Form 1120S). “Subchapter C” treatment is generally not advantageous to small business entities and will not be discussed in detail since it often results in ‘double taxation’ with profits first taxed at the corporate level and then again at the individual shareholder level.

We have prepared an all-inclusive package of services with no hidden fees to get you started. This package is tailored to your opportunity with Arise Virtual Solutions.  We will prepare and file your Articles of Incorporation and Bylaws, prepare and obtain your federal employer identification number, prepare and file your Subchapter S election, and prepare your organizational minutes and bank account resolution.  This is everything you need to get started.  Additional “bells and whistles” can be added by you at any time.

Corporations are taxed one of two ways--as a Subchapter C corporation or as a Subchapter S corporation. If no Subchapter S election is filed, a corporation is automatically taxed as a Subchapter C corporation. The earnings of Subchapter C corporations are subject to “double taxation” meaning that because a corporation is a separate taxable entity from its shareholders, its earnings are subject to tax. When the remaining earnings are distributed to its shareholders, those distributions are subject to tax a second time. 
“Subchapter C corporation” treatment is generally not advantageous to small business entities since it often results in “double taxation” with profits first taxed at the corporate level and then again at the individual shareholder level.   Because this form of corporation is usually not a viable choice for Arise. com agents, we have not discussed this treatment in detail.

To avoid the “double taxation” applicable to Subchapter C corporations, shareholders may file an election to be treated as a Subchapter S corporation. Subchapter S corporations are treated like “partnerships” which are “pass-through entities.”  Subchapter S corporate earnings are “passed-through” without tax at the corporate level so that such earnings are taxed only once at the individual shareholder level. 
The “Subchapter S” election includes certain restrictions and is available to certain “smaller corporations” and their shareholders. Over time these “Subchapter S” restrictions were seen as too restrictive. The “limited liability company” was created to broaden the availability and flexibility of “pass-through” tax treatment. Like Subchapter S corporations, LLC’s that elect “disregarded entity’ or “Subchapter S” treatment, “pass-through” their earnings without tax. Earnings are taxed only once at the individual owner level.
“Subchapter S” treatment is generally slightly more costly than an LLC that is treated as a “disregarded entity”.  A “Subchapterb S” election is required at formation and earnings are required to be reported on a corporate tax return (Form 1120S). 

LLC’s and Subchapter S corporations are substantially similar from the key perspectives of limitations on liability and “pass-through” tax treatment. LLC’s can achieve “pass-through” tax treatment either as a “disregarded entity” or through its own Subchapter S election. Subchapter S corporations can only achieve “pass-through” tax treatment through a Subchapter S election. Differences arise in the following areas:

LLC’s have more flexibility, and no limitations, in their permitted ownership structure. Subchapter S corporations are limited to 100 shareholders, all of which must be natural person shareholders (no corporations, LLC’s, partnerships, trusts or alien individuals) and cannot have more than one class of stock. These distinctions may be relevant for certain tax-planning, asset-protection and other considerations.

“Single-member LLC’s” treated as “disregarded entities” are generally simpler and less costly than a Subchapter S corporation since no corporate or Subchapter S election is required at formation and since earnings are reported on simpler Form 1040-Schedule C’s. No corporate tax return (Form 1120 or Form 1120S) is required for LLC’s. 

14. What is a “limited liability company,” a “sole proprietorship,” or a “partnership”?

A “limited liability company” (“LLC” for short) is a business entity created by one or more owners (“members” in LLC parlance) under state laws to conduct one or more lawful businesses.  An LLC with only one owner is referred to as a “single-member LLC” and an LLC with more than one member is referred to as a “multiple-member LLC.”  Every state now permits the formation of LLC’s and while the laws are generally similar, there are variances from state to state. An LLC is a separate legal entity from its owners/members and its owners/members are generally not personally liable for the debts of the LLC so long as its formalities are followed. An LLC is governed by its member(s) or by its member-manager(s) in accordance with the terms of its Articles of Organization and its Operating Agreement (or applicable state laws if there is no Operating Agreement). LLC’s are created by filing its Articles of Organization with the applicable state. Annual reports must be filed each year (usually by April 1 or May 1) to avoid late fees and eventual administrative dissolution.  Generally, an LLC must register as a “foreign entity” if it conducts business in states other than its state of organization. 
A “sole proprietorship” is not a separate business entity. It is merely a business conducted by one owner (the “proprietor”). Since a “sole proprietorship” is not a separate entity, its owner is personally liable for all debts of the business. A “sole proprietorship is governed by its owner and there are no governing documents or boards. There is no filing necessary to create a sole proprietorship although “fictitious name filings” are necessary if the business is conducted in a name other than the name of the sole proprietor.  There are no annual reports required of a sole proprietorship. A sole proprietorship need not register as a “foreign entity” if it conducts business in states other than its owner’s state of domicile since the owner will be personally liable in every state in which business is conducted. 
A “partnership”  is a business entity created by two or more owners (“partners” in LLC parlance) under state laws to conduct one or more lawful businesses. Partnerships include a variety of general partner (unlimited liability)and limited partner (limited liability) structures and while the different state laws for these structures may be generally similar, there are variances from state to state. A partnership is a separate legal entity from its partners.  However, “general partners” in both a general partnership entity and in a limited partnership entity are personally liable for all debts of the partnership. “Limited partners’ have a limited role, and therefore limited liability, and are generally not personally liable for the debts of the partnership so long as its formalities are followed. A partnership is governed by its “general partners” in accordance with the terms of its Partnership Agreement (or applicable state laws if there is no Partnership Agreement). General partnerships can be created just by their Partnership Agreement and no filing with a state is necessary. Limited partnerships generally require a filing with the applicable state. Annual reports are not required for general partnerships and may be required for limited partnerships and, if so, must be filed each year (usually by April 1 or May 1) to avoid late fees and eventual administrative dissolution. Generally, a general partnership need not register, and a limited partnership must register, as a “foreign entity” if it conducts business in states other than its state of organization. 

Local business licenses vary from city to city, county to county and go by many different names, i.e., occupational licenses, business permits, etc. While many home businesses fail to seek such licenses, it is best to check with your city or county to determine if you are required to obtain a local business license. They will be able to advise you of the requirements, forms, costs, etc.

*Monthly payment plans are available with no credit check. There is an $11 total processing fee to use a payment plan, of four equal payments. A standard price for LLC formation is $249. Standard pricing offered to "Arise Virtual Solutions" Independent contractors includes same-day turnaround service with NO hidden charges.