Setting Up A Corporation
Setting Up A Corporation
Chas Rampenthal (Attorney-at-Law) gives expert video advice on: How do I issue stock in my corporation? and more...
Are there restrictions as to what I can name my corporation?
Just like any other legal entity, every state has restrictions on what you can name it and most of those come from a few different areas. Number one would be you can't name anything where there's a name that's confusingly similar or exactly similar to a name of another corporation that's out there. You can always check that out by taking and reserving the name in advance or having someone do a name check first. Additionally, corporations, states like you to identify them by placing something after the name of the company. Typically it's I N C, Inc. or it's incorporated or corporation or company or corp. or some combination of that, either with or without a comma. What that does is it really identifies to individuals when you put it on a business card or on a website or on a contract that they're dealing with an entity and not with you personally. Also, many states have other regulations that would prevent you from naming a company like a bank or naming it a trust company or naming it 'Police' or naming it, you know, like the 'Federal Bureau of Investigations' or, you know, even if it's something that isn't taken in your state they don't want anything that's going to, kind of confuse you with a government entity or make people think that you might be a bank when you're not an actual bank.
What are a corporation's "articles of incorporation"?
The articles of incorporation are the formation documents; the essence, the beginning of the charter of a company. In the same way that the articles of organisation (or certificate of organisation, depending on your state) are the things that start a limited liability company, the articles or certificate of incorporation are what start up or give birth to the legal entity; your corporation. Every state's law varies as to what's required from the articles of incorporation. Many states have forms they use that delineate exactly what information what needs to go in there. So each state has their own laws, and following those, and complying with them, will give you the proper articles of incorporation and enable you start up your legal business.
What are my corporate "bylaws"?
Corporate bylaws are very similar to how the business is going to be conducted. It's very similar to an operating agreement of a limited liability company, but not nearly as detailed. Corporate bylaws set out and delineate how the directors and officers and the shareholders of the company are going to meet, how they're going to conduct business, how they'll be elected or removed from office and what the duties of certain officers are going to be. The corporate bylaws are really the document along with the articles of incorporation that set out the charter of the company. Those two documents together are like the initial building blocks for a company.
How are corporate bylaws adopted?
Bylaws are adopted generally, if you have an incorporator that sets up the business, a lot of times, the incorporator in the very first meeting will just adopt the bylaws that have been set forth. Additionally the shareholders or directors could adopt the bylaws, depending on what your bylaws say, because it depends on the state and on what your bylaws say. However the bylaws can be amended or adopted, usually it's by a majority of the shares, the shareholders can change the bylaws, or they can adopt new bylaws, or amend them, or restate them in any way. But initially, the very first set of bylaws, typically chosen by the incorporator or the shareholders in the company.
What must corporate directors do in their first meeting?
It really does depend, and I kind of hate that answer, and as a lawyer it's an answer I tend to give a lot. It depends on A: What have you done in the past that you might need to memorialize in your very first meeting minute, what you intend to do in the immediate future, what you are doing right now, and what has been done by the incorporator. So if the incorporator has already elected directors, and the incorporator has already adopted bylaws, you don't need to redo those things over again. However, if you have been running a business before you had incorporated it, and you had signed a very big, major contract with a supplier or a vendor, you might want to ratify that contract. Additionally you might want to set out the corporate bank account and authorize it, ratify any employment agreements, identify what the corporation's fiscal year is going to be, how accounting is going to be done. I mean, they're pretty endless. And what it really comes down to is you should take a look at A: Common sense -- what things do I know I need to do, and let's put those in there, and then I would always suggest talking to a legal professional -- an attorney, typically -- who would have some ideas of some other things that you might want to include in there, and if you ever have a doubt as to whether or not there is something you need to ratify, or not ratify, whether it's in a first meeting, or any meeting, an attorney would be the person who would give you that answer.
What type of bank account does my corporation require?
Well, most personal banks have personal and business services. It does definitely depend on your bank. Some banks don't really do a lot of business banking. You just need to find a bank that does provide personal business banking. You'll need to go to that bank and find out exactly what it is that they require. Typically, what a bank will require is usually three things. Number one, they're going to need a tax ID or an EIN, an employer identification number. Number two, they're going to need a legitimate member or officer or director of the corporation or limited liability company, someone who's authorized to open up the account and be a signatory for it. And then number three, a lot of times they're going to want a resolution. And that is one of the resolutions that the board would adopt that says it's OK to open up that bank account. And most of the time, a bank, when you open it up, will give you a form of resolution, and all you have to do is fill it in with the name of your company and the date that you did it. This can be done and ratified and just attached to meeting minutes that you have at your next board of directors meeting. Typically, at a very first meeting, I would state that we have the ability to open a bank account. For instance, if I knew what bank it was, I might mention it, and I would say that we have the ability and that any officer, proper officer or director, has the ability to go in and sign any paperwork on behalf of the company to make that happen. So the second signing of it doesn't require a whole another meeting. You would just go ahead and attach it and say, "This was the thing that we signed." And that makes it up and on the level, and it allows you to work a lot faster when it comes to dealing with the bank.
After the articles of incorporation, will additional documents be required?
Every states different, and you should obviously check with your states laws on what documents you want to file. In addition to the articles and, the bylaws don't need to necessarily be followed, but in addition to your articles of incorporation, in any business permits or tax exempt status, or state tax sellers, resellers permits that you might want to do, you should always think about your federal and state's securities laws. So a lot of times if you issue securities in a company you might have to make a record of that and alert your state that you've issued securities in a company, so anytime that you have issued stock, that is what's called, that's a security, or any time you issue out a loan that someone can convert into stock, that's a security, and you need to check your states laws and also the federal laws, as to whether or not that security is exempt from registration, and if it is exempt, then usually there's a small filing and sometimes a fee that you have to pay that lets the state know that that's an unregistered security that didn't need to be registered, but it's out there and its been issued.
What happens if I don't file my S corporation election on time?
All is not lost, and there is a way, through the IRS's website, and I would definitely say that you should go there, www.irs.gov, and take a look at "late S-corp election filing". The rules are that if you would otherwise meet the qualifications for filing an S-corp, but have not filed your taxes yet (providing you have some sort of reason why you forgot to file it), you file it on a particular form and there's a rule that you can go to, and all of the directions are right there on the IRS's website. Most of the time, you can actually request it late, and it will still be retroactive to the date that your corporation started or that fiscal year. Again, it's not a guarantee, but it's probably about the best shot that you have.