Some states refer to registered agents as statutory agents , resident agents , or agents for service of process. What is a Registered Agent? A registered agent is an individual or entity that has been appointed by an LLC or corporation to receive service of process, government correspondence, and compliance documents on behalf of a business.
To learn more, read our What is a Registered Agent guide. Who Can Be a Registered Agent? Your registered agent can be an individual, business entity, or professional registered agent service. Any member of the corporation or individual can serve as your registered agent as long as the person:. Designating someone else to serve as a registered agent for your LLC or corporation has its benefits.
To learn more about hiring a registered agent service for your corporation, read our Should I Use a Registered Agent Service guide. Is a registered agent service worth it? Using a professional registered agent service is an affordable way to manage government filings for your corporation. For most businesses, the advantages of using a professional service significantly outweigh the annual costs. For more information on how to set up a registered agent in your state, visit our What is a Registered Agent guide and choose your state from the drop-down menu.
If you don't have a registered agent, there are negative consequences in most states. Your business could be penalized with lawsuits and fines, lose good standing with the state, and could eventually be dissolved. Before you officially file the formation documents in Step 4, you will need to hold an organizational meeting to complete the following tasks:.
Bylaws are the rules that determine how your organization will be governed and run. You can think about the bylaws as a constitution for your corporation. It makes the rules and priorities clear for everyone involved. What is a Quorum? A quorum is the minimum number of members of an assembly that must be present at a meeting to make the meeting valid, or any of the votes held therein.
Ready to get started? These bylaws templates can be customized to suit the needs of your incorporated business. A corporate director is in charge of the adoption, amendment, and repeal of operational bylaws as well as the election, supervision, and removal of officers.
After forming the corporation, the incorporator s — or initial director s , if named on the formation documents — should call an organizational meeting. During this initial meeting, either the incorporator s will elect the board of directors or the initial director s will appoint the officers. A share of stock is the unit of ownership of a corporation. Each share of stock represents a percentage of ownership of the company.
Shares can be structured into classes. Each class, termed a share class , holds different rights and privileges. You can have multiple classes and each class can hold any number of shares. Authorized Shares: the number of shares the corporation is allowed to issue.
Issued Shares: the total number of shares actually issued to shareholders. Share Class: a group of shares that has a unique set of rights and privileges. Some states only allow corporations to list one class of shares on their provided formation document. In these cases, you must either complete an additional provision or draft your own formation documents. Check with your state for further instructions. NOTE: We recommend starting with a high number of authorized shares. Many attorneys suggest 10 million.
By starting with a high number, you have the flexibility to issue shares as needed without paying legal fees to increase your initial authorized shares amount.
It should be stored with the rest of your corporate records. What is a Corporate Director? What is a Share Class? A share class is a group of shares that has a unique set of rights and privileges compared to other shares of the same corporation.
For state-specific formation information, choose your state from this drop-down. Once the documents are approved, you will have officially formed a corporation. Most states provide the formation documents online, while others require you to draft your own formation documents. What is an S corporation? An S corporation is a tax designation that can be used by corporations and LLCs alike. S corporations are taxed as pass-through entities.
This means that S corps do not pay federal taxes on their business income. Read our What is an S Corporation article to learn more. What is a C corporation?
A C Corporation is the default structure of an incorporated company. Read our What is a C Corp article to learn more. How many authorized shares should my corporation list? New corporations should list a high number of authorized shares on their formation documents. Most legal and business professionals recommend 10 million shares be authorized when a corporation is formed. What is an authorized share vs an issued share?
Authorized shares are the number of shares that a corporation is allowed to issue. Issued shares are the shares that have actually been distributed to shareholders. What is an EIN? It is essentially a social security number for the company.
How do I get an EIN? This can be done online or by mail. Apply Online. Download Form. An LLC provides limited liability protection without corporate complexity. Find out if an LLC is the right structure for you. It is very important to adhere to the formalities of running a corporation. In order to protect your personal assets, and not allow creditors or municipalities to pierce your corporate veil , you must:.
During this meeting, a copy of your proposed changes should be distributed to the board members. Depending on your bylaw structure, either a majority vote or minimum vote will be required to pass the amendment.
A second meeting will need to be held with all voting parties to either approve or disapprove your proposed amendments. Think of this as the hard-copy record book where all critical corporate documents are kept, like your California Articles of Incorporation, bylaws, meeting minutes, stock certificate ledger, stock transfer documents, etc.
You should keep the corporate records book at your principal location. Corporate records book kits can be purchased online, or you can use a large generic binder to store your records. Corporations in most states must hold an annual shareholders' meeting. The first annual shareholders' meeting should occur soon after formation. During this meeting, the shareholders elect the board of directors. These meetings are called to discuss important business matters that will affect the corporation.
Your state may have unique meeting notice requirements for special meetings. If your corporation has more than one shareholder, you will need to provide formal notice of meetings to owners shareholders , employees, and officers before the meeting occurs. The notice must provide the following information:. When a meeting must be held at the last minute, without formal notice of the meeting, a waiver of notice must be signed by all eligible people stating that they are giving up the right to receive formal notice as laid out in the bylaws and formation documents.
Since a corporation is its own legal entity, shareholders are not personally liable for company transgressions except in circumstances like negligence , and their personal assets are safe from legal suit and debt collection.
Although liability protection holds true in most cases, shareholders need to follow their state's specific requirements. Another major advantage of a corporation is the ability to maintain business continuity, regardless of who the owners are.
Since a corporation is its own entity and ownership is transferred in the form of shares, it is easier to transfer ownership and percentage of ownership. This is especially useful when an owner wants to leave the corporation or in the event of a shareholder's death. A third advantage to forming a corporation is access to capital.
A corporation is often more expensive to maintain than other business entity types, but it is typically easier to raise large amounts of capital from multiple investors if you incorporate. The incorporation of your business happens as soon as your articles of incorporation are filed with the secretary of state.
Although filling out the form for the articles of incorporation may only take a few minutes, it could take weeks or even months to prepare all the documents you will need to file the articles of incorporation. You may also have to pay fees for your registered agent. In short, no. Not every business will benefit from incorporation; in fact, some that become corporations are worse off than they were before.
Becoming a corporation and maintaining its status thereafter requires a lot of time and money. It is important to consult your lawyer and tax advisor before you take the steps to incorporate. The roles and responsibilities do not outweigh the tax savings and legal benefits for some business owners. To determine if incorporation is in your best interest, you need to know your company's goals and capabilities.
For example, if you are simply trying to incorporate for tax purposes, you may want to think again. Barlin said the same income tax deductions apply to unincorporated businesses. With a few exceptions, you can deduct any business expense that is "ordinary and necessary" for your business irrespective of entity type. Skye Schooley. Follow this six-step process to turn your business into a corporation. A corporation is legally viewed as a separate entity from its shareholders owners.
Advantages of becoming a corporation include business continuity, access to capital and limited liability. To become a corporation, you will need to file articles of incorporation with your secretary of state. This article is for businesses of any size that want to incorporate. What is a corporation? How to become a corporation Kelly DuFord Williams, founder and managing partner of Slate Law Group , outlined the six steps a small business can take to become a corporation.
Hire a transactional attorney. An attorney can walk you through the business formation process. Corporate formation and governance laws vary by state and are constantly changing, so an experienced attorney will be invaluable in managing the formation process and avoiding any issues.
Appoint a registered agent and file the articles of incorporation. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site.
The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service.
Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. How to Form a Corporation. To form your own corporation, you must take these essential steps. Here's what you must do: Choose an available business name that complies with your state's corporation rules.
Appoint the initial directors of your corporation. Create corporate bylaws , which lay out the operating rules for your corporation. Hold the first meeting of the board of directors. Issue stock certificates to the initial owners shareholders of the corporation.
Obtain any licenses and permits that are required for your business. Choosing a Corporate Name The name of your corporation must comply with the rules of your state's corporation division. You should contact your state's office for specific rules, but the following guidelines usually apply: The name cannot be the same as the name of another corporation on file with the corporations office. The name must end with a corporate designator, such as "Corporation," "Incorporated," "Limited," or an abbreviation of one of these words Corp.
0コメント