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CORPORATIONS << Back | Our Fees | Learn More >>
Operating Your Corporation In order to maintain the benefit of shareholder limited liability, several issues must be considered in the operation of your corporation. Bylaws and Resolutions. Once your corporation has been formed, corporate bylaws must be established by the founders or directors of the corporation. Corporate bylaws are the "rules" for the corporation and its shareholders. While bylaws vary widely from organization to organization, they generally address topics such as the election of directors, how director and shareholder meetings are conducted, and the officers of the corporation. Corporate resolutions are written resolutions that serve to outline strategy, compensation, and benefits to the shareholders and officers of a corporation. While they are not required for every corporate decision, it is a best practice procedure to record the major decisions of the corporation in the form of written resolutions. This strengthens the legal shield of the corporation by providing solid evidence that any action was taken on behalf of the corporation and not on behalf of the owners or officers. Don't worry, we provide bylaws and resolutions with every corporation formation package. Maintain Separation. One of the most important aspects of properly operating a corporation is to keep the business matters of the corporation separate from the personal matters of each shareholder. At no time should the personal funds of any shareholder be intermingled with the funds of the corporation. In addition, the corporation should have its own separate bank account. Separate records should also be maintained for the corporation. Annual Meetings. Directors must hold periodic meetings. Shareholders are required to meet a least once a year to elect directors. A written record of all discussions and actions approved at these meetings must be maintained. Meetings can take in person or by telephone. In the alternative, however, corporate action can be approved by written consent, where all directors or a majority of the shareholders sign a statement approving the action. Records. The corporation must maintain an accurate account of all meetings by the board of directors or shareholders. These accounts are known as “minutes” and are maintained in the corporate “minutes book”. The care and accuracy of the minutes is the responsibility of the corporate Secretary. It is important that thorough and accurate minutes are maintained, as these minutes can prove invaluable against attempts to disprove the separate legal entity status of the corporation (thereby eliminating the limited liability protection of shareholders against debts of the corporation). Tax ID Numbers. A corporation must obtain its own federal tax identifcation number from the IRS. Banks will also request it when opening a bank account. |
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