The Corporation is the legal form of a business that is at the heart of modern business law. The corporate form is not popular for new businesses.1 Most large companies use the corporation. Learn how to manage a corporation effectively.
Corporations provide several benefits to businesses and investors:
Corporations are most often distinguished by the subchapter of the Internal Revenue Code5 under which they fall. There are three common types of corporation:
After you form a corporation, you must maintain it to keep it in compliance. Track the following information for a corporation:
This table summarizes the types of corporation documents and filings:
|Shareholder agreement||at formation||No|
After forming a corporation, it is important to track compliance obligations. Compliance requirements vary widely based on jurisdiction, line of business, and type of legal entity.
Here is how to design compliance tracking:
|Trade name or DBA||State||Yes||Yes||Annual|
Of course, you should substitute actual filing requirements for your business. This table gives you a framework to capture the essentials of any compliance filing.
Not all businesses have a Board of Directors or even officers. LLCs, corporations, and some forms of partnership generally create a corporate structure for governance (a board of directors) and management (officers or managers).
Most states require that corporations have a Board of Directors unless the shareholder agreement provides otherwise.12
People often serve more than one role so it is important to list officers and directors by role and not by name. In the long run, it is also helpful to track terms of service for each role and person.
Here is the information to track for officers and directors:
Please note that a person can have two different roles with very different terms of service.
Corporate owners and investors are usually called "Shareholders" or "Stockholders". Ownership interests are called "stocks" or "shares". There are several other instruments which convey ownership interests such as options, warrants, and convertible debt.
You should capture the name of the owner and the percentage of ownership at a minimum.
To preserve the benefits of your legal entity, effective ongoing maintenance is critical.
Non-Profits are also called "Not-for-Profit" or "501(c)(3)", which refers to the specific provision of the tax code for public charities. ↩︎
Exceptions apply. ↩︎
Exceptions apply. ↩︎
Specify the government agency. ↩︎
Substitute the actual expiration date. ↩︎
Add the periodic cycle. There are exceptions. ↩︎