LEGAL
A. Corporation
Forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. The primary advantage of a corporation is that its owners, known as stockholders or shareholders, are not personally liable for the debts and liabilities of the corporation. It can own and operate a business, hire employees, buy and sell goods and services, enter into contracts, lease or buy real estate, maintain its own checking and savings accounts, and sue and are sued. A corporation is not affected by the death or bankruptcy of any shareholder, officer or director. Instead, it continues to exist as long as it complies with the state requirements and corporate formalities. * Corporate Formalities: i. Director and Shareholder Meetings ii. Separate Financials iii. Annual Reporting iv. Corporate Tax Return
i. Director and Shareholder Meetings
Corporate shareholders must typically meet annually to elect corporate directors. It’s the job of the directors to meet at least annually to elect corporate officers. You may also need to hold special meetings to approve special actions like purchasing another company, amending charter documents, adding a new shareholder and approving actions that fall outside of the normal course of business. Written minutes should be kept which record the actions taken at the meeting. While it may sound daunting, this doesn’t have to be a hassle. . ii. Separate Personal and Business Finances
Since a corporation is a separate legal entity, corporate finances must be kept separate from your own personal finances. It’s essential to have a corporate bank account, and you will need a separate federal tax ID number. iii. Annual