Forming a corporation may be helpful to business owners because it is treated as a distinct legal entity for the purposes of liability and taxes. However, there are numerous formalities that need to be observed, and the corporation will need to follow its own articles of incorporation and bylaws strictly. It also will need to hold formal meetings to obtain limited liability protections for shareholders. General corporations are taxed both when the profits are earned and when the shareholder receives them. If you are interested in learning more about whether forming a corporation is right for your business, or you need help with the legal formalities required when maintaining a corporation, the San Jose corporate lawyers at the Sowards Law Firm can provide knowledgeable advice and representation. Consulting a business attorney is an important step to take in furthering your goals.Requirements and Procedures Governing Corporations
In addition to making sure that the name that you have chosen for your corporation is not identical to or too similar to a name that already exists in the California Secretary of State's records, you will need to file Articles of Incorporation and a Statement of Information if you want to create a corporation or register a foreign corporation in California. The articles need to include the corporation's name and address, the reason for the corporation, contact information for the agent for service of process, and how many shares the corporation will be permitted to issue. Whoever is chosen as the agent for service of process must agree before you designate them. The address must be a physical street address, rather than a PO Box. The Statement of Information needs to be filed within 90 days of filing the Articles of Incorporation.
You will also need to create a corporate records book that includes items such as stock certificates, stock certificate stubs, and the minutes of the director and shareholder meetings that you hold.
You should also create bylaws that govern how the corporation is operated, although they do not need to be filed. These bylaws will establish internal governance and show everyone that the corporation is a legitimately distinct entity. Whoever signs the articles needs to appoint initial corporate directors who serve on the board until the shareholders meet, and they must also complete an incorporator's statement that identifies who these initial directors are. This statement goes into the corporate records book.
Your corporation must hold meetings. At the first meeting, the directors will need to appoint corporate officers, choose a corporate bank, authorize the issuing of stock shares, determine the fiscal year, and adopt the bylaws, as well as an official stock certificate form and a corporate seal. Minutes must be recorded by the incorporator or a director.
Issuing stock is another formality that may be complicated and may require assistance from a corporate attorney in the San Jose area. Stock is considered a security, and if the stock in your company is not a private offering (a sale that is not advertised and only to 35 or fewer people), there are numerous regulations that must be followed. If you are thinking of buying or selling a corporation, you should also retain legal counsel. Among other things, as an acquirer, you will need to make sure that the seller discloses all liabilities, whether or not you plan to assume these liabilities. You may want to know about the corporation's contracts, taxes, and wages, as well as what is owed to suppliers and any customer obligations.Consult an Experienced Corporate Lawyer in San Jose
If you are looking for an experienced attorney to make sure that you comply with the many legal formalities associated with forming and maintaining a corporation, the San Jose corporate attorneys at the Sowards Law Firm may be able to help. We can also help our clients acquire other corporations, prepare business contracts, and properly dissolve a business. We represent clients in Campbell, Mountain View, Palo Alto, Santa Clara, Berkeley, Oakland, Concord, Walnut Creek, San Rafael, Salinas, San Mateo, Santa Cruz, and San Francisco, among other cities. Call us at (408) 371-6000 or use our online form to set up an appointment. We also can assist clients who need an LLC lawyer or guidance in creating other business forms.