What happens at the first meeting of the board of directors of a corporation and when does it take place?
June 28, 2009
The first meeting establishes the corporate structure of the company by appointing the initial directors and officers, authorizing the issuance of share to the initial shareholders, authorizing the bank of choice for the corporation, and establishing the principal place of business, in addition to many other important details. The meeting should take place after the corporation is in existence and has the authority take action. It is prudent to hold the meeting after the corporation has received a filed copy of the article of incorporation from the secretary of state to ensure that the company in authorized to do business and validly existing.
How will I be notified that my corporation has successfully obtained subchapter S Status?
June 28, 2009
After the Election by a Small Business Corporation (IRS Form 2553) has been filed with the IRS, you will receive a letter from the IRS indicating that your election has been accepted. It is very important to maintain a copy of the acceptance letter in your corporate book as your accountant will most likely need it to prepare your corporate tax returns. Unfortunately, the letter is often confused as junk mail and thrown away. To avoid this, it is the practice of our firm to list our mailing address on the form 2553 so that the S election acceptance letter is delivered to our office for safekeeping.
What is an incorporator and what is his or her role in the formation process?
June 26, 2009
An incorporator is the individual who organizes the incorporation and arranges for the Articles of Incorporation to be filed with the Secretary of State. The incorporator signs the Articles, verifying the information submitted is true and correct. Oftentimes, the incorporator is not a shareholder, director or officer of the corporation. Most frequently, the incorporator is the lawyer who is handling the formation of the corporation. Following the first meeting of the Board of Directors and officers, the incorporator resigns from its role. Accordingly, the incorporator’s signature appears on the corporation’s organizational documents.
What does “doing business” mean, and when do I have to “qualify” to do business?
June 12, 2009
Every state in the country requires a foreign LLC or corporation to “qualify” to do business in a state where it is “doing business”. So what constitutes doing business? It’s defined differently from state to state, but states tend to define it broadly and ambiguously. In California, for example, doing business is defined as “entering into repeated and successive transactions”. What does that mean?!
Most states, including California and New York, provide lists of “safe harbors” that do not constitute doing business (e.g., holding a board meeting, soliciting orders). In other words, we know much more about what is NOT doing business than what IS doing business.
Although both California and New York include simply maintaining a bank account on their list of safe harbors, as a practical matter, opening a bank account still tends to require a qualification. Thanks to the Patriot Act, most banks will require a qualification before they will open a bank account for a foreign corporation. See, http://www.eminutesonline.com/it%e2%80%99s-un-patriot-act-ic-california-banks-impose-burden-on-corporations-seeking-to-open-accounts-that-conflicts-with-language-and-spirit-of-patriot-act-and-its-implementing-regulations/
