Corporations are limited liability partnerships that are separate and distinct from their owners. In a corporate business structure, shareholders have the right to participate in profits, but are not held personally/financially liable for the company's debts. This section contains information and resources for small business owners who are interested in forming a corporation. Here you will find tips on legal and tax issues related to corporation -- including creation of articles of incorporation and corporate bylaws -- and tools that walk you through each phase of the incorporation process.
Professional Corporations: What You Should Know
A professional corporation (PC) is an organization of professionals in the same field who wish to incorporate their practice such as doctors, lawyers, or accountants. In many states, this is the only option for individuals hailing from these careers who want to incorporate. PCs offer their owners several benefits such as limited personal liability for business debts.
What Happens When a Shareholder Wants to Leave the Corporation?
Ownership changes can have a lasting impact on your business. If you form your corporation with a shareholder buyout agreement, you will have the benefit of transferring your partnership without disrupting operations. Owners of a corporation can control the transfer of shares by executing a separate buyout agreement and making sure to keep accurate records of the nature of each shareholder's investment in the corporation. These provisions are typically included in the articles of incorporation, the by-laws, or in a separate written agreement.
Writing Corporate Bylaws
Corporate bylaws are rules that govern the daily operations of your business. Considered by many as the most important document of any organization, they establish and protect the rights, and specify the duties and responsibilities of an organization's members, Board of Directors, executive committee, and others. Each set of bylaws will be specific to that organization, but typically they will include the Organization's name, purpose and location, a list of its members inducing who is on the Board of Directors and list of officers. It will also spell out the nature and timing of meetings and give instructions on how to amend the bylaws.
Why Incorporate in Delaware?
Delaware, also known as a "tax haven," has a reputation as having the most business-friendly laws in the country. Numerous corporate giants are incorporated in the tiny state including Apple and Coca-Cola. The state of Delaware does not collect corporate taxes from businesses who do no operate in the state. Nor does the state collect tax royalty payments or are you required to publicly divulge the name of your corporation's board of directors or shareholders.
Hiring a Business Lawyer for your Corporation
Forming a new corporation can be an exhilarating process, but you should think carefully before deciding to do it on your own. You may want to consider hiring a competent business attorney who is responsive, and experienced with the types of legal issues with which you will need help. The considerations that go into incorporating a chain of coffee shops, for instance, can be very different from the considerations for incorporating a telecommunications company.