Corporations FAQ

What are Corporations?

A corporation is a legal and business entity with separate rights and liabilities from its founding (as well as new) members. Corporations are formed for a number of reasons: to organize a new business, to protect its members from liabilities and to pool resources together. In essence, a corporation is simply a type of business; usually larger businesses register as corporations in order to handle a larger amount of members, stock owners, and partners.

There are different types of corporations that can be registered. Understanding the different benefits and features of each corporation type is important if you are planning on creating a corporation for your business, as some corporation types are better suited for different business models and industries.

What kinds of corporations exist?

In the United States, there are a few different types of corporations to be aware of:

• General Corporation, or C Corporation: The most common corporation structure in the U.S., the C Corporation is popular because it allows for an unlimited number of stockholders – ideal for big businesses that plan on having a lot of investors or even going public with their shares. If you are planning on having over 30 stockholders in your corporation, you will likely be looking to file for a C Corporation structure.
• S Corporation: Also known as a Subchapter S Corporation, this corporate structure is ideal for sole proprietors who want to be registered as a corporation but still enjoy many of the benefits of sole proprietorship. Needless to say, is a common type of corporation for smaller businesses, as the maximum number of stockholders is currently at the level of 75.

These are two of the most common types of corporations. If you see a company registered as an LLC, remember that the “C” actually stands for “Company,” and the organization registered thusly is technically not a corporation. There are, however, many similarities between LLCs and small corporations.

What kind of corporation should my business be?

That will depend on your business’s goals and needs. If you are a one-man or one-woman operation and don’t have a big need to expand with more members, you may be just fine running a sole proprietorship; in time, you may want to register as an S Corporation. If you have a business that is in need of outside money and is looking to expand, then a C Corporation will likely be in the cards. However, to get the best gauge on your situation, you’ll need to know more than these simple goals; you’ll need to know the precise limitations and capacities of each corporation type.

What kind of limitations does an S Corporation have?

Registering as an S Corporation comes with a number of benefits, such as the tax benefits of a sole proprietorship. However, this advantage also comes with a number of limitations. For example, passive income (such as income on rental property) cannot constitute more than 25% of the gross revenues of an S Corporation. Additionally, offering stock is difficult, as there is only one class of stock to be issued and the amount of shareholders has to be limited to 75. For many sole proprietorships, however, registering as an S Corporation allows for additional liability protection while not increasing tax burden.

Why should I incorporate?

You don’t necessarily have to. Again, it depends on your business and legal needs. The advantages to filing for corporation status are numerous; it helps to keep your liability in business dealings down while also allowing you certain tax benefits. However, there may be some limitations in certain types of corporation filings that you’ll want to be aware of. The best way to evaluate your own incorporation needs is to evaluate the needs of your business and then research which corporation type suits those needs the best. It’s also important to confer with any other members of your business.

How do I file for corporation status?

Filing for corporation status is not as difficult as it sounds. It merely requires the right paperwork and that you follow all of the procedures involved. Many downloadable corporation forms will come with instructions for filing for corporation status in your state, so be sure that you use the forms relevant to your company’s location. From there, you should have no trouble preparing the forms by filling in the blanks, reading them through, and sending them to the appropriate state office.

Besides registration forms, what other kind of relevant corporation forms exist?

There are a number of corporation-related forms you’ll likely need after incorporating your company. For the most part, it’s most convenient to download these forms in a combination package to ensure that all of the necessary forms you need are at your disposal. However, you may simply have a need for a few individual forms, such as Minutes of Shareholder Meeting or Board of Directors Unanimous Written Consent.

From the perspective of start-up forms, many of the popular forms you’ll need include the Articles of Incorporation, Amendment to Articles of Incorporation, etc. It’s good to have all of these at your disposal.

What kinds of contracts are relevant to corporation formation?

Typically, the formation of a corporation does not require contracts from the perspective of the state with which you’re filing your corporation; however, it is important that you have written contracts with all members involved with your company, such as a Partnership Agreement that lays out the details of how a business is to be structured. Having these contracts in writing will be good for your own sake; however, what’s important to the state is how your corporation is registered and structured.

When is my corporation registered?

It will depend on the state you’re filing with; typically, the wait is not long. But you’ll want to check with your local state government before assuming that your corporation has been properly filed; this will ensure that you’re handling all of your legal undertakings under the right context. Things will move most quickly when you use the relevant in-state forms for your corporation filings.

Corporations

• Corporation Forms Combo Packages

  Best Value! Corporation Forms Combo Packages containing the most frequently used corporate forms. Included are combos containing board of director forms, shareholder forms, corporate start-up information and forms, unanimous written consents, resolutions and waivers.

• Articles of Incorporation

  Popular Articles of Incorporation which are the initial document filed for any corporation and will serve as notice of incorporation. Included are Articles of Incorporation Kit which will guide you through the corporate filing process. Also included are Articles of Incorporation for a Nonprofit Corporation to be used when filing for nonprofit status in Nevada.

• Board of Directors Agreements and Forms

  Popular - Board of Directors Agreements and Forms for use by corporate directors. These forms include, among others, meeting minutes, resolutions, waivers and consents and forms related to first, annual and special board meetings.

• Resolutions

  Popular - Resolutions which cover a variety of situations encountered by a company's shareholders or members of the board of directors. These forms include resolutions for corporate merger, sale of corporate assets and corporate dissolution.

• Shareholders

  Popular - Shareholder forms for use by corporate shareholders. Forms include meeting minutes, resolutions, agreements and notice of shareholder meetings.

• Stock Certificates & Ballots

  Popular - Stock Certificates & Ballots for use in maintaining your corporate records. These forms include a ballot, stock certificates, declaration regarding a lost certificate and indemnity regarding lost certificate.

• Stock Purchase Agreements & Related Documents

  Popular - Stock Purchase Agreements & Related Documents for use in the purchase of company stock. Included are a stock purchase agreement, equity incentive plan, escrow agreement for shares and stock subscription agreements. Letters of Intent to purchase stock are also included.

• Articles of Incorporation - Amendment

  Articles of Incorporation Amendment for use when amending a corporation's initial articles of incorporation. This amendment sets out the specific provisions to be amended and those which remain in effect. Included is a checklist which will be useful in amending the original articles.

• Business Plans

  Business Plan forms designed to provide you with the tools you need when developing and writing your company’s Business Plan. Included are worksheets for a business plan, marketing and financial planning.

• Bylaws

  Bylaws for use when setting up the structure and operation of your corporation. These Bylaws set out the number of directors and officers of the company, how they are elected, when formal meetings must be held and how any board vacancies will be filled. Bylaws basically set out the rules and conduct under which members of the corporation must abide.

• Bylaws - Amendments

  Amendment to Bylaws which will effectively amend a corporation's existing bylaws. This form contains the provisions within the Bylaws to be amended (such as notice requirements for meetings) and those provisions which remain in effect. An Amendment to Bylaws becomes a part of the official corporate record.

• Dissolution of Corporation

  Dissolution of Corporation form for use when it is agreed that a corporation should be dissolved. This form can be used to voluntarily dissolve the corporation by agreement of the directors and shareholders or in the event of corporate bankruptcy.

• Financial Record Keeping Kits

  Financial Record Keeping Kit which will assist in navigating the often confusing record keeping requirements. This kit contains balance sheets, profit and loss statements and a financial checklist.

• Founders Agreements

  Founders Agreement which sets forth the rights and obligations of the founding members of a company. This agreement sets out the company's name and specific role each founding member will play within the company.

• Pre-Incorporation Kits

  Pre-Incorporation Kit for use by those in the process of filing a corporation. This kit contains worksheets and checklists which will help in determining your corporation’s purpose, type and structure. It also contains a document filing checklist to ensure your corporate paperwork is filed correctly.

• S-Corporation Status

  S-Corporation Status Kit which contains important information regarding S-Corporations. This kit contains notes and requirements for use in filing for S corporation status, corporate checklist and notice, waivers and minutes for use by a S Corporation.

• Service of Process

  Service of Process form for use in the State of Nevada. This form designates an individual or company to act as resident agent of a corporation, limited liability company or limited partnership and to accept service of process of any and all legal documents.

• Share Purchase Agreements

  Share Purchase Agreements for use when purchasing shares from an individual or vendor who owns certain corporate shares. These agreements contain all relevant terms including number of shares, price paid and any closing conditions which must be met.

• Stock Options & Warrants

  Stock Options & Warrants forms for use in creating and maintaining options for your employees to purchase company stock. Included are stock option agreements for varied situations, share and common stock option purchase warrants and a notice of exercise of options.

• Stock Power

  Stock Power to be used when transferring ownership of capital stock from one party to another. This form sets out the names of the parties and number of shares, their class and the name of the entity who issued the stock.

• Voting Agreements

  Voting Agreements for use when giving a voting trustee the right to vote certain shares held by a shareholder. These agreements set out all relevant terms including the number of shares, how the voting shares will be held and authority to vote the shares.