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What to do after your Corporation is formedSo you have decided on your Home Business. chosen the Corporation that is right for you, and completed the processing of it. So what is the next step? Well, there are now some formalities that are required. First of all, as a Corporation, you need to hold and properly document annual meetings. At this meeting bylaws are adopted and stock should be issued to the shareholders. If a corporation does not correctly document this, there is a chance that the corporation can be be disregarded. This is sometimes called "lifting the corporate veil". This can be a very negative development because if this happens, the owners of the corporation may be held personally accountable for debts of that corporation. Another important reason to keep good records of corporate meetings is that a disagreement among owners can be more readily resolved when they can review the records. In addition to this organizational directors' meeting record, you should also have an Annual directors meeting record, a shareholders meeting record every year, and a record of any other special meetings. These are called corporate minutes of the meetings. They should be kept in the corporate records but it isn't necessary to file them with the State. When you initially have your meeting of the corporate board of directors and before you issue shares, you may want to utilize the plan under a section of the Internal Revenue Code (IRC 1244) that grants regular or ordinary as opposed to capital treatment of losses on certain "small business stock." The stock has to be common stock for this to happen. The information about incorporation given here should not be construed as legal advise but rather as a general overview for the purpose of giving you an idea of some of the possibilities that exist when you incorporate. It does not constitute legal advise nor is it comprehensive in nature. For professional advise consult with an attorney or tax specialist before proceeding. |
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