DETAILED INCORPORATION INFORMATION
Set forth below is detailed information regarding the incorporation process. Topics include choice of entity (whether to form a corporation, LLC or limited partnership), the State in
which to incorporate, selecting a registered agent, corporate business names, corporate kits, bylaws,
board of director organizational minutes, Employer Identification Numbers (EIN), Subchapter S elections,
principal place of business for your corporation, corporate directors, corporate officers, etc.
Selecting a Form of Entity
for your New Company: Corporation, LLC (Limited Liability Company)
or Limited Partnership (LP)
No single factor is determinative in choosing whether
to start your new business by incorporating a corporation,
an LLC or a limited partnership. If properly organized and maintained,
all three types of business entities establish separate
legal entities that can provide their owners with
protection against personal liability for the debts
and obligations of the new business. If properly formed
and maintained, a corporation is taxed as a separate
entity unless the corporation and its shareholders
or stockholders elect Subchapter S Status for the
new corporation. In general, LLCs
and limited partnerships provide their owners with
pass-through taxation treatment, and there is little,
if any, taxation at the entity level.
A corporation is organized by filing Articles of
Incorporation (or a Certificate of Incorporation)
with the Secretary of State's office, adopting Bylaws,
appointing directors and officers, and issuing stock
to the Company's shareholders (or stockholders). The
members of the Board of Directors of a corporation
govern the Company's overall business affairs, but
elect officers to manage the day-to-day business of
the Company. An LLC is formed
by filings Articles of Organization (or a Certificate
of Formation) with the Secretary of State's office,
adopting an LLC Operating Agreement
(or LLC Agreement), appointing a manager (or managers)
and issuing membership units to the Company's members.
The manager(s) of an LLC govern
the Company's overall business affairs and can either
manage the day-to-day business of the Company, or
appoint officers to manage the day-to-day business
of the Company. A limited partnership is organized
by filing a Certificate of Limited Partnership with
the Secretary of State's office, entering into a Limited
Partnership Agreement and issuing partnership units
to its partners. Every limited partnership must have
at least one general partner who manages the day-to-day
business of the limited partnership. The other partners
in a limited partnership are referred to as limited
partners.
Selecting a State: Incorporate in California,
Incorporate in Delaware, Incorporate in Florida, Incorporate in Nevada,
Incorporate in New York or Incorporate in Texas
The first step in forming every corporation is to file the necessary
Articles of Incorporation (or Certificate of Incorporation) with the Secretary
of State's office in the State in which the organizers would like the new business
to be incorporated, organized or formed. Determining which State in which to file
often is governed by where the business is located, a desire to take advantage of
lower (or no) taxes on income in certain States and a desire to establish the business under the laws of pro-business States. For example, the State of Delaware generally is considered to be a very pro-business state; whereas, the State of Nevada does not impose income taxes on corporate income. In general, however, it often is most advantageous to incorporate in the State in which the business will be located. We offer incorporation services in California, Delaware, Florida, Nevada, New York and Texas.
Selecting a Registered Agent
for your Corporation
Every corporation must appoint a registered agent
in its Articles of Incorporation
(or Certificate of Incorporation). The registered agent
is the person upon whom any lawsuit or other legal
proceeding against the Company can properly be served,
and to whom information from the Secretary of State's
office and the taxing authorities will be sent. The
registered agent must have
an address in the State in which the corporation is
incorporated. The name and address of the registered
agent will be public knowledge
and easily retrievable by anyone through the Secretary
of State's office. Although one of the organizer's
of a new business may serve as its registered agent,
many business owners elect
to have an unrelated company act as the Company's
registered agent in order to
avoid unnecessary disclosure of their names and addresses.
A and A Companies serves as registered agent for its clients
in California, Delaware, Florida, Nevada, New York and Texas.
Selecting a Business Name for your
Corporation
The business name that you select for your new corporation cannot
already be in use or be reserved by someone else,
and it cannot be deceptively similar to another name
in use or reserved for use. Name availability is determined
by the Secretary of State's office of the State in
which you are incorporating your corporation. The best way to ensure that your new
business will have the name you want is to provide
A and A Companies with a list of 3 names, in order
of preference, and request that A and A Companies
check for business name availability before submitting the
Articles of Incorporation (or Certificate of Incorporation).
If you do not do this,
and the name you have selected is not available, your
Articles of Incorporation (Certificate of Incorporation) could be rejected
by the Secretary of State's office and the formation
of your new business delayed several weeks.
Corporations incorporated in Delaware, Florida, New
York and Texas must include in their names, "Inc.",
"Incorporated", "Corp.", "Corporation"
or "Company".
Ordering a Corporate Kit for
your Corporation
All corporations must maintain books
and records that contain, among other things, minutes
of meetings and a log indicating ownership in the
Company. Most corporations maintain these and other records
in a Minute Book.
In addition, shareholders or stockholders in a corporation
are entitled to stock certificates from the corporation
that evidences their stock ownership.
A and A Companies can provide you with a Corporate
Kit that comes complete with a leather-bound, gold
embossed Minute Book and official Stock Certificates. In addition, included in
the Company Kit is an official Company Seal for use on the
Certificates as well as on other company documents.
Preparing Corporate Bylaws for your
Corporation
In order to complete the incorporation of a new business
as a corporation, the Board of Directors of the corporation
must adopt Bylaws. The Bylaws govern the business
affairs of the corporation. Typical corporate Bylaws
address such matters as shareholder (or stockholder)
meetings, the number and powers of the corporation's Board
of Directors, notice requirements for meetings, committees
of the Board of Directors, officers, indemnification
of a Company's officers, directors and certain other
agents, and other general corporate matters.
A and A Companies prepares corporate Bylaws for its customers.
These Bylaws are tailored to the specific corporation
based on information that you supply to us in your
Corporate Application.
Preparing Board of Director Organizational
Minutes for your Corporation
In order to complete the organization of a new corporation,
another document must also be prepared and adopted
by the new corporation's Board of Directors. This
document, known as "Board of Director Organizational Minutes," will provide for the adoption of the corporation's Bylaws,
election of the corporation's Board of Directors and its
officers, issuance of stock to the corporation's owners,
authorization to establish one or more bank accounts,
as well as other general corporate matters.
A and A Companies prepares Board of Director Organizational Minutes
for its customers. These Organizational Minutes are
tailored to the specific corporation based on information
that you supply to us in your Corporate Application.
Preparing IRS Form SS-4
Employer Identification Number (EIN) for your Corporation
Every corporation that employs persons and pays
wages must have its own Employer Identification Number
(or Tax Identification Number). This number is analogous
to an individual's social security number. This requirement
exists even if you are the only employee of your new
business.
A and A Companies prepares IRS Form SS-4 Employer
Identification Number (EIN) applications for its customers. This Form
is tailored to the specific corporation based on information that you supply to us in your
Corporate Application. It can take several
weeks to receive an Employer Identification Number
back from the Internal Revenue Service, but at A and
A Companies we can tell you how to obtain that number
immediately after your new corporation has been incorporated.
Preparing IRS Form 2553
Subchapter S Election for your Corporation
An "S Corporation" is a regular corporation
that has made an election under the Internal Revenue
Code to be treated as a conduit for tax purposes.
As a result, there is no separate tax at the corporate
level, just at the shareholder (or stockholder) level.
Only certain corporations qualify for S Corporation
status and, hence, only these corporations have the
option of electing S Corporation status. Only corporations
that, among other things, (i) have no more than 35
shareholders (or stockholders), (ii) have only individuals
(and certain estates and trusts) as shareholders (or
stockholders), (iii) have only one class of stock
outstanding (common stock); and (iv) do not own any
subsidiary corporations, may elect Subchapter S Corporation
status.
In general, if you completed your Corporate Application
without changing the default settings A and A Companies
has supplied in that Application, your new corporation
should be eligible for Subchapter S Corporation status.
A and A Companies prepares IRS Form 2553 Subchapter S Election for its customers, based on information that
you supply to us in your Corporate Application.
Principal Place of Business
Every corporation must have a principal place of
business. The address for this principal place of
business must be a physical location (not a post office
box). A corporation's principal place of business can
be a home address. A corporation's principal place of
business need not be located in the State in which
it is incorporated. However, if that is the case, the
corporation must have a resident agent located in that State. A and A Companies can
act as your corporation's resident agent in California,
Delaware, Florida, Nevada, New York and Texas.
Issuance of Common Stock by Corporations
In order to complete its organization, every corporation
must issue common stock. Common Stock represents ownership
interests in the corporation. The corporation issues
Stock Certificates to the owner of the common stock
to evidence his or her ownership. A corporation can
only issue common stock if it has received consideration
for that stock. Typically, the founders of a corporation
contribute cash to the new corporation in exchange
for their common stock. Some states (including Delaware
and Nevada) base minimum corporate tax on the amount
of a corporation's "stated par value". At
A and A Companies, we set your initial stated par
value so that it will result in the minimum corporate
tax possible. If, however, you change the number of
shares of common stock from "10,000" (which
we have included in the Corporate Application), we
cannot guarantee that your new corporation's initial stated
par value will result in the minimum corporate tax
possible.
Corporate Directors
A corporation must have at least one director (or
member of the corporation's Board of Directors). We
have set up our Corporate Application form so that
you may appoint up to three directors. The initial
director(s) should be the Company founder(s) and/or
other people who will be involved in the new business.
The directors are responsible for governing the corporation's
overall business affairs. The Board of Directors appoints
the corporation's officers to run the day-to-day operations
of the Company, subject to general oversight by the
Board of Directors.
Corporate Officers
A corporation's Board of Directors appoints officers
of the corporation to run the day-to-day operations
of the Company, subject to general oversight by the
Board of Directors. Every corporation must have at
least a President, Chief Financial Officer (or Treasurer)
and Secretary. A corporation also may have additional
officers, such as Vice Presidents and Assistant Secretaries,
etc.
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