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| | | | FREQUENTLY ASKED QUESTIONS Also see: Getting Started A corporation is a legal entity created through the laws of its state of incorporation. Individual states have the power to promulgate laws relating to the creation, organization and dissolution of corporations. Many states follow the Model Business Corporation Act. State corporation laws require articles of incorporation to document the corporation's creation and to provide provisions regarding the management of internal affairs. Most state corporation statutes also operate under the assumption that each corporation will adopt bylaws to define the rights and obligations of officers, persons and groups within its structure. States also have registration laws requiring corporations that incorporate in other states to request permission to do instate business. There has also been a significant component of Federal corporations law since Congress passed the Securities Act of 1933, which regulates how corporate securities are issued and sold. Federal securities law also governs requirements of fiduciary conduct such as requiring corporations to make full disclosures to shareholders and investors. The law treats a corporation as a legal "person" that has standing to sue and be sued, distinct from its stockholders. The legal independence of a corporation prevents shareholders from being personally liable for corporate debts. It also allows stockholders to sue the corporation through a derivative suit and makes ownership in the company (shares) easily transferable. The legal "person" status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation's structure. Corporations are taxable entities that fall under a different scheme from individuals. Although corporations have a "double tax" problem --both corporate profits and shareholder dividends are taxed -- corporate profits are taxed at a lower rate than rates for individuals.  A corporation is a separate legal entity, authorized by state statute. The Secretary of State of each state authorizes the filing of articles of incorporation, which provide for, among other items, bylaws, stockholders, directors, officers, employees, annual meetings, resolutions and the rules and regulations by which the corporation is to operate. Corporations are recognized as legal business entities in all 50 states. As legal entities, corporations exist in much the same way as do real persons. In other words, a corporation may own property, sue other entities, including other corporations or persons. It may enter into contracts and agreements and may also sell or otherwise dispose of its property by any means provided by law. There are several reasons, including:
All corporations begin as a "C" Corporation. The "S" Corporation status is an election made by the director(s) of the corporation. The "S" Corporation is treated similarly to a partnership for tax purposes. The profits and losses flow through to the stockholders, based on percentage of ownership, and avoids taxation at the corporate level. There are advantages and disadvantages to each corporate status.
Every state legislature has passed laws that control how a corporation may conduct its business. They have also passed laws which establish how a corporation is set up and maintained. This process is characterized by the filing of certain documents at appropriate times. Every corporation has a "life cycle", which starts with the filing of the Articles of Incorporation and will only terminate with the "dissolution" of the corporation, or its demise by operation of law because of the failure of its principals to properly maintain its formalities. While each state has specific requirements with regard to the incorporation process, certain aspects of incorporation are the same from state to state.  You need Corporate Minutes because it is the law! In order to properly run your corporation and abide by corporate law, you must keep accurate and complete minutes of every directors' and shareholders' meetings, including any corporate decisions and the votes taken to approve them. Corporate Minutes are a written record of what goes on at all shareholders and directors meetings. The purpose of corporate minutes is to show that the corporation called a meeting, and your board of directors and/or shareholders acted on key legal, tax and financial decisions. Corporate Minutes provide a written record of important corporate transactions including approval of bonuses or fringe benefits, contributions to retirement plans, rent payments, reasonable compensation, and accumulated earnings. Corporate Minutes are a fail-safe way to show your directors, shareholders creditors, suppliers and especially the IRS and the courts that you acted appropriately and in compliance with applicable laws and regulations. Your Corporate Minutes are your insurance policy to protecting your business and personal assets. A Resident Agent is a person or organization, such as National Business Incorporators, Inc., that essentially stands in your place in the state of Nevada and is authorized by you to accept service of process in the event legal papers are served on your corporation.
State Law provides that you can live and do business anywhere in the world with a Corporation, but you are required to have an agent in that state to represent you.
No. Not if you live outside the state. The Resident Agent for any company must be physically located within the boundaries of the state.
Having an office presence is a requirement by State law. In order to ensure that the personal liability protection offered by a corporation is maintained, all state requirements must be met.
The courts have established the following guidelines to determine whether a corporation is in fact a true corporation:
To elect S Corporation status, your corporation must meet specific guidelines.
Not all domestic general business corporations are eligible for S Corporation Status. Exclusions:
For more detailed information regarding S Corporation status, contact your accountant, attorney or local IRS office.
National Business Incorporators, Inc. can assist you in preparing and submitting the IRS Form 2553 as part of your incorporation process. National Business Incorporators, Inc.
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