Convenience: CorporateKit.com offers a range of services and products that can help you file your corporation and get a corporate kit in one convenient location. This can save you the time and effort of sourcing these items from multiple providers.
Quality: CorporateKit.com is a reputable provider of corporate documents and supplies, so you can be confident that you are getting high-quality, accurate products when you buy from them.
Customization: CorporateKit.com offers the option to customize your corporate kit with your corporation's specific information, such as the corporate name and state of incorporation. This can be particularly useful if you have a unique or unusual corporate name that may not fit onto a standard corporate seal.
Support: CorporateKit.com may also offer support and guidance from professionals who can help you understand and use the documents and supplies effectively. This can be particularly valuable if you are new to starting a corporation or have limited experience with business administration.
Cost savings: Buying a corporate kit from CorporateKit.com can often be more cost-effective than purchasing the items individually, as you may be able to get a discount for purchasing the items as a package. This can be particularly beneficial if your corporation is on a tight budget or if you want to minimize your business expenses.
Click HERE to file your new business today!
]]>How a business is formed
Let’s start by forming LLCs. An LLC is founded by one or more businesspeople as owners. The owners, called "members," file Articles of Organization to make the business. Then, they agree on an Operating Agreement to use in managing the day-to-day activities and agree on each member's percentage share of ownership.
Forming a corporation is made, or we would rather say incorporated, by filing corporate organization documents within the State where the corporation is founded. The corporation also creates a Board of Directors to oversee the company business and therefore the board agrees on bylaws and operating documents. The corporation could also be a stock corporation, with shares of stock and stockholders, in addition to the main owners of the business.
Business Ownership
The main difference between LLCs and corporations lies in the ownership of the business. You would possibly say that a corporation is owned by individuals who purchase shares, while the LLC is owned by individuals, those who founded the business from scratch.
LLC owners have an equity interest in the assets of the business since they need to contribute to kickstart the business, while corporate owners are shareholders or stockholders with shares of stock.
Profits and Losses
Losses and profits of an LLC and a corporation are shared differently. LLC profits and losses are shared between individual owners, while corporate profits and losses are held by the corporation itself.
Additionally, corporations are separate business entities. The profits and losses of the corporation are held by the corporation and aren't sent to the owners directly. Yes, some earnings of the corporation could also be paid to the owners in dividends, but it is not direct.
Corporate kit
Corporate kits for corporations consist mostly of a binder, Corporate Embossing Seal, Corporate Certificates, By-laws, Minute Books, Sample forms and Ledger
On the other hand, corporate kits of LLCs consist of Binders, Corporate Embossing Seal, LLC Certificates, Operating Agreement, Minutes Book, Sample forms and Transfer ledger.
Whatever your business structure is, you can rest assured to find the ideal corporate kit or LLC kit that will help you stay on top of your documents here.
]]>Formation Requirements
A corporation is an independent legal entity, whereas a sole proprietorship may be a commercial activity operated under the owner's name. Business owners file articles of incorporation with a state business registrar to make an organization. The incorporation process can cost a few dollars and take an amount of your time. Comparatively, most states don't require sole proprietors to register before they begin doing business. As long as you use the business under your name, you'll start the business without paying any upfront costs and on your timetable.
Limited Liability
A sole proprietor is the only person liable for all the business Liability. Business creditors can satisfy a judgment against your assets, like your house and family bank accounts. Also, sole proprietorship operates under the Social Security number of the business owner. Credit transactions involving the business show abreast of your credit report. Incorporation provides shareholders with a liability shield. A business creditor can only satisfy a judgment against the corporation's assets. Also, an organization has its taxpayer-identification number and doesn't use the Social Security numbers of shareholders.
Ease of Management
Corporations are complex business entities that are highly regulated at the State and federal levels. Shareholders must manage an organization consistent with the formalities established by law, alternatively risk losing the protection of the company form. Sole proprietors, on the opposite hand, can run their businesses without having to suit any management formalities because as the owner, you'll run the business in any way that suits your purposes.
Tax Obligations
The Internal Revenue Service classifies an organization as a taxpayer. Regular corporations must file tax returns and pay taxes on business income at the corporate tax rate. Sole proprietorships aren't required to file a separate income tax return for the business. The owner records business income and expenses on his income-tax return, making it easier to satisfy IRS business-tax requirements.
Ownership Restrictions
A sole proprietorship is simply a friend of the owner. All business assets and liabilities are within the owner's name, so it is often hard to separate business affairs from personal affairs if the owner wants to sell the business. The business will cease to exist immediately the owner dies. An organization is structured to make it easy to transfer ownership to a third party by selling shares of stock. The corporation also has an independent existence, so it continues to work if the shareholders change or die.
]]>More often than not, and painfully so, corporations will take a path walked by many, and survived by few. This is often the trail of opening their own business than making some of the most common mistakes. Therefore, whether you've been in business for twenty years or are simply still in the dreaming process of opening your own personal one, you should definitely try to learn about the painful mistakes many corporations make when first getting started. You will never know how much these mistakes would cost you!
Not Putting Aside a Selected Allow Advertising
The first mistake corporations make when getting started is to somehow forget placing aside a selected allow advertising. You’ve got an incredible product or service, an excellent location, and positive perception, but without an advertising budget, you run the risks of monetary defeat alongside the +65% of corporations that fail in their first year.
To every corporation: advertising is your ally. Advertising is your best salesperson. They do not complain about getting paid, they do not whine if there are no clients, they do not demand benefits and pension plans, and that they are always working for you. Advertising is your best friend!
Never Consider Creating a picture And Identity for their Company
The second mistake corporations make is to never consider creating a unique identity for their business. You spend a day of your entire life creating an identity for yourself, but you are feeling that your business doesn't deserve one. Imagine that a client bought something from you and that they loved it and went and told their friend. If they cannot remember your corporation’s name, or logo, then rather than telling them about you, they direct them to a world without specifics, which might make potential clients lost from you and won by your competitor.
The last one is about not employing a corporate kit to keep their papers in order.
A corporate kit is typically a binder that contains the corporation's most important documents, like the corporation meeting minutes and the corporate seal. It can also contain stock certificates, bylaws, and articles of incorporation. It provides one place to store the corporation's most vital papers as well as the corporate books and seal.
Most corporate kits come binders, with the name of the corporation embossed on the binder's front or spine. The kit makes organizing your corporate documents easier than ever since the documents are all stored within the binder. You can also place other legal documents within the binder, like contracts and business licenses owned by your corporation.
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The Corporate Kit or LLC Kit is usually a custom-made organizational binder and a hassle-free, time-tested way to collect and keep your company’s administration records stored safely.
As you develop your corporation or LLC (Limited Liability Company), it is advisable to objectify the administration of your business. This includes a good organization of your most important files —including minutes associated with the activities of the business, bylaws, operating contracts, shareholder contracts, share records and stubs and transfers.
Well-maintained documents do not only enhance professionalism, reliability, and comfort, but also your own peace of mind. Occasionally, courts touch the company’s corporate veil so they can hold the managers personally responsible for the debts of the business. Great records can show the self-reliance of the firm from the personal affairs of the managers, which makes an essential safeguard against such statements.
Designed specifically for such documents, thanks to helpful section-dividers that collect and separate different types of files, the Corporate and LLC Kits likewise contain the Company Seal within a pouch installed onto the rings and the trademarked label.
Every kit will contain a binder, with a slipcase. The spine of the binder will have the name of your corporation, LLC or non-profit, engraved on it.
Additionally, every corporate kit will include a metal seal with the business name, state, a form of organization (Corp, LLC or not-for-profit) as well as the year of incorporation. In your LLC kit, you can keep documents related to working contracts, membership records and regular membership transfer ledger. As for the corporate kit, the files would be the minutes and bylaws, share certificates and share transfer ledger, while non-profit organizations’ kit will incorporate the organization’s bylaws and membership certs.
Although getting a corporate kit might be mostly optional, many banks may require viewing a copy of the corporation’s records to find the outline of the organization and its managers. Furthermore, your bank may require your corporate seal as a signature. Therefore, we highly recommend you get a complete kit for your corporation. You will never know when the need for the files, or the seal, would arise when submitting your records to your bank, or even to the state.
Finally, if you still need any assistance or have questions, simply send us an e-mail or leave a comment below. We will reach out to you as soon as possible!
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Making use of a corporate kit depends on many factors. But first, you should
start by learning what a corporate kit is and what motive it will serve in the
corporate universe, to decide on the investment.
-Corporate Kits
A corporate kit is generally a binder that contains the business’ essential
paperwork, like the corporation meeting minutes as well as the corporate seal. It
occasionally includes stock certificates, bylaws, in addition to the articles of
incorporation. The corporate kit provides one location to save the corporation's
most significant documents and the corporate information and seal
safely.
Many corporate kits are three-ring binders stamped with the name of the
corporation within the binder's front side or spine. That kit makes arranging
your corporate files convenient since the paperwork is all kept in the binder. This
will enable you to place other official documents in the binding, including
contracts and industry permits owned by the firm. Besides, the corporate kit will
give an elegant touch to your desk making your corporation appear official,
though it is, of course, formal, with or without a corporate kit.
Is Using a Corporate Kit A Good Idea?
You will find two opinions when it comes to using a corporate kit. Several
lawyers suggest obtaining the kit after forming the corporation, or simply soon
afterward, which means you enjoy a way to organize your documents; various
other attorneys admit the kit is optional.
Essentially, obtaining a corporate kit is a matter of preference. But if you would
like to portray an image of professionalism and keep all your records easily
within reach, then getting a corporate kit would be the right decision, no matter
the size of your business.
A corporate kit saves your important paperwork. Additionally, it is great to
obtain if the accountancy firm or other partners need having access to your
corporation's documents. On the other hand, if there is ever a court proceeding,
our corporate kit will enable you to offer the corporate files in a single
destination, which makes them readily available.
LLCs And Corporate Kits
LLCs possess much less rigid record-keeping needs than corporations. LLCs
usually do not need corporate minutes, since LLCs do not maintain shareholder
meetings. Yet, no matter the number or type of the documents used by a
corporation or an LLC, keeping a kit is necessary for the effective management
of legal records.
However, just like business incorporation requires some necessary legal records,
you must also bear in mind there are some essential “must-have’s” you will
need when incorporating your business. The following items must never be
overlooked, no matter the corporate structure you chose to adopt.
1.A Company Binder:
A gold embossed company binder is the star of the whole collection.Having a binder with your corporation’s name engraved on its
spine does not only speak of your professionalism, but it also gives your comp
anymore authority as it reminds anyone who enters your desk of your corporation's legal presence.
In addition to that, your corporate binder will enable you to keep all your legal
records in perfect order. Knowing where each legal paper is placed will make
it easier for you to reach out to it without struggles whenever you need it,
saving you massive amounts of time, stress and efforts. When looking for a
corporate binder, we believe the ideal choice to be a binder made of heavy
and Eco-friendly materials. This will make your company binder more
durable and harmless to the environment.
2.A Corporate Seal:
Each company has a specific set of documents it must agree on. This is when
the owners or decision-makers are usually faced with the importance of a
company seal and the role it plays.
Generally, a company seal is used on documents that managers, directors or
board members are exchanging or need to agree on. Thus, having your
documents sealed with your company’s registered name, its incorporation
year, and its logo is the best way to confirm your company’s
confidentiality and support.
Choosing your company’s seal usually occurs once your business is
incorporated. The moment this step is completed, and all the important
documents are signed, the company can then start its activity without any
issues.
3.Stock Certificates:
Stock certificates are legal documents that prove ownership of a number of
stocks or shares in a corporation. These legal documents stand as evidence
and are usually required to facilitate stock exchange or the transfer
of the shareholding.
This legal form reflects the legal interest of ownership in stocks or
assets.Therefore, every corporation must have its own stock certificates to
make the shareholding transfer easier, legal and more confidential.
At Corp U.S.A, we understand how daunting it can be to gather all these items
in order to make your business incorporation go smoother. For this reason,
we created a special Corporate Kit that enables you to get all the elements
mentioned above, in addition to many more, with unmatched quality at
affordable prices.
With decades of experience in this field, we know what our
customers’expectations are, and we work on exceeding them in every
delivery.
An incorporation is a legal structure that can take many shapes. These can
include limited liability companies (LLCs), corporations, S-corporations and non-
profit, for instance.
When it comes to business incorporation, remember that whatever the structure
you choose should not necessarily be permanent. In fact, toucan change it and
go from one structure to another one as your business matures.
Generally, the advantages of an incorporated business can include:
• The Protection of Personal Liability
An incorporated business allows its owner and shareholders to protect their personal assets from those belonging to the corporation. Since it is considered
as an independent entity, the corporation is only liable for its assets, debts and
obligations, regardless of the financial situation of its owners or shareholders.
• Potential Reduced Taxes
Many tax benefits can be offered to a business once it is incorporated.These
benefits can greatly help in the management of a corporation's financial
situation, even though they might only apply under certain conditions.
In all cases, it is essential to discuss these benefits with your accountants to
explore the different areas where the benefits are applicable.
• Capital Increase
Once a business is incorporated, it is considered to have an independent
corporate identity. As a result, your business will gain more credibility. This will
encourage shareholders to buy stocks and securities to become part of your
incorporation’s success and contribute to increasing its capital.
Business incorporation can offer you many advantages. However, choosing
which structure to adopt highly depends on your business activity. At the end of
the day, there is no right or wrong structure.
In addition to that, the laws vary from one state to another. Therefore,consulting an attorney is important to ensure you are making the
right decision for your business.
The Articles of Incorporation of professional service corporations must specifically
state that their main purpose is to practice a specific profession. They are not
allowed to engage in other businesses, but they are given the freedom to invest in
various investments like real estate, stocks and bonds, mortgages, etc.
Professional service corporations can also choose to change their purpose to any
other legal purposes, but they will no longer exist as a professional service
corporation.
Persons of the same profession are the only ones allowed to become
shareholders of professional corporations. If a particular shareholder suddenly
loses his/her right to practice his profession, the corporation must immediately
sever the shareholder’s employment as well as any other financial interest that
the shareholder has with the corporation. If a severed shareholder continues to
take part in the corporation’s affairs, the state will take the necessary measures
to dissolve the said corporation.
Professional corporations are not allowed to use the words “company”,
“corporation”, or “incorporated” in its company name. Instead, the words
“chartered”, “professional corporation”, or “professional association” may be
used in its place, or they may opt to place the initials “P.C.” or “P.A.” in their
company name.
Professional service corporations have very specific requirements required in most states before they can be established. A specific language is required for this type of corporation, particularly with regard to their Articles of Incorporation,Corporate Charter, and bylaws. With this regard, it would be best to get legal assistance from an attorney when choosing to go into this kind of corporation.
]]>Many business owners normally prefer to incorporate or establish their
businesses in their own home state as it offers them the convenience and
familiarity of operating in their own community or locality. In some cases where
companies do not want to “do business” locally, then this is when they choose to
incorporate in another state or country (e.g. A New York cab company who has its
base of operation in New Jersey. A heavy equipment company in California with a
base of operation in Texas). The term “Doing Business” does not only refer to the
act of selling/moving products and gaining profit from that business within the
state, but it also refers to having an actual physical business presence or
establishment within that state.
Delaware Corporations
Since the 19 th century, the state of Delaware has established its business and
taxation laws that has attracted a lot of businesses outside of the state. Delaware
is known to have the most business-friendly usury laws. Usury laws are legislation that places a cap or limit on the amount of interest that can be placed on loans or other types of financing. This is a form of consumer protection that controls the amount of interest that can be charged on consumers.
Delaware usury laws give banks and credit card companies the freedom to charge high interest rates on loans, this in turn gives lenders the leeway to charge
interest on their local customers. For this reason, some businesses outside of the
state opt to incorporate in the state of Delaware. This is common among large
U.S. companies, especially those who belong to the S&P 500 list. What this means is that these businesses incorporated in Delaware are allowed to charge interest according to Delaware usury laws even if they are conducting businesses outside of the state. These companies that are incorporated in the state of Nevada but conduct business outside of the state are what is referred to as Delaware Corporations.
Nevada Corporations
The state of Nevada is the only state in the US that does not charge corporate or
individual state taxes. It is also one of only two states (the other is Texas), that
does not have an information sharing agreement with the IRS. What this offers to
individuals and companies is the protection of their personal assets and their
information. Because of these laws, Nevada has in turn become a well-known
corporate haven for businesses.
In recent years, a large number of West Coast based companies that have
headquarters in a different state, have been drawn to incorporate their
businesses in the state of Nevada. The state of Nevada has thus become
somewhat of a “tax-haven” for these companies that are attracted by its fierce
protection laws against hostile takeovers. These companies who are incorporated
in the state of Nevada, but have headquarters and operations outside of the state
are what is referred to as Nevada Corporations.
Additional Considerations
Among the considerations you should take when thinking about incorporating in a
state outside of where your business is located, is the fact that you have to
register your company as a foreign company doing business locally in the state
where your business is located. With this, you would be needing an agent or a
physical address or headquarters in that state, this will prove to be more
expensive and complicated in comparison to incorporating your business in your
own state. In cases wherein a lawsuit would be filed against you or your company
in the state where you are incorporated, these type of lawsuits are for more
expensive as compared to lawsuits that are filed in the state where you are
actually located.
You have to be careful in choosing the right business structure for your company. Although it is possible to convert your business structure after being in the business for some number of years, you might encounter some restrictions in doing so depending on your location. Some of the complications you might encounter along the way are tax consequences or unintended dissolution's, to name a few. Thus it would be wise to consult business counselors, attorneys, and accountants with regard to choosing the right business structure for the business that you intend to put up.
Here are the common types of business structures:
Corporations can take many shapes and forms, from big ones operating on an international scale, to small ones governed by single person.
Nevertheless, when it comes to corporations, it is not all roses. Corporations are among the most regulated structures in the business world. Thus, your corporation will always be required to respect rules that are not imposed on other structures.
For this reason, it is important to learn about the different business structures and gain a clear understanding of the advantages and disadvantages of corporations prior to deciding to incorporate your business.
]]>S Corporation
S Corporations, or what was formerly called as “Sub-section S Corporations”, do
not pay income taxes and are solely used for small businesses. Whatever the
company loses or gains within the year will be passed through the shareholders,
who in return will report this in their individual annual returns. The corporation
files an information return listing all of the company’s expenses, earnings, its
depreciation, and other financial matters at the end of each year. In accordance
to their individual stock percentage ownership, each shareholder is given a notice
of his or her share.
Using this status is quite advantageous because it avoids double taxation and
allows the company’s losses and depreciation to be passed-through, because the
business is treated as a partnership especially for taxation purposes. Due to the
cost of starting up a business, some corporations opt to be in the S status while
gradually switching to C Corporation status after a few years of operation.
Typically, S Corporations are not required to pay state corporate income taxes.
Some disadvantages of an S Corporation is in the case where shareholders come
from high income brackets, because they will be taxed at those rates. As for
shareholders who do not participate materially in the business, whatever loss that
have been incurred cannot be deducted. Fringe benefits like health and life
insurance, may not be tax deductible.
To qualify as an S Corporation status, corporations must meet the following
requirements:
C Corporation
C Corporations pay taxes on its net earnings based on corporate rates. All salaries paid by the corporation to all its officers, directors, and employees are deductible to the corporation but taxable for the aforementioned people. Dividends that have been paid out are taxed twice, because it is taxed at the corporation’s rate as part of its profit, and it is taxed as income to the individual shareholder’s rate when the corporation distributes these to them.
This status is mostly advantageous for corporations whose shareholders belong to
a higher tax bracket than the corporation, taxes are saved and the money that is
left can be used for expansion of the company. Fringe benefits like health,
accident, and life insurance may be filed as deductible expenses.
The most notable disadvantage of this status is the matter of double taxation of
dividends. In most states they have an income tax that applies only to C
Corporations and all income it acquires up to a certain amount. What this means
is that any income earned by the company and profits paid out to its
shareholders, including salaries paid out to its directors, officers and employees
will be taxed accordingly.
The corporate bylaws can contain provisions that tells how the corporation should conduct its affairs. It would also indicate the roles, functions, and duties of the Company Directors, Corporate Officers, and its employees. The corporate bylaws also detail the policies and responsibilities of all of the company’s shareholders.
The Corporate Bylaws should never be confused with the Articles of Incorporation. The articles are the charter by which the corporation was formed while the bylaws are the internal set of rules and procedures followed for the governance of the corporation.
]]>It is possible to be your company’s own registered agent as long as you meet certain requirements as stated by law. Although it is tempting, it is really not advisable to be your own company’s registered agent. With the amount of legal responsibility that would be thrusted on you, being your own registered agent would not only be detrimental to you, but also very risky for your business.
Registered agents are very crucial for companies, especially if they do business in other states, or if they are not based in the state where they conduct business in (example you are from Rhode Island and your business provides a service in New York). This is where a registered agent could become your primary contact when it comes to legal matters concerning your business.
The registered agent service becomes the entity to receive all notices and service of process for your business. The thorough procedures followed by these registered agent services make sure that they can track anything received in behalf of your business and ensures that it will come to your attention as quickly as possible.
]]>Corporate Officers may or may not be shareholders or directors of the
corporation. Depending on the needs of a corporation, there is no limit as to the
number of officers that a particular company should hire/appoint. There is even
no limit to the number of offices that one person can hold within a company, in
some cases one person holds more than one office in a company (some
companies have Presidents who are also the company CEO). In fact, there are
even companies that have one person who hold all corporate offices.
During the first meeting of the Board of Directors, when the initial stocks have
been issued, the members of the board then elects or appoints individuals to take
in the vacant offices available in the corporation. Being appointees, these officers
are considered employees of the company, and they can only be replaced upon
recommendation of the Board of Directors through a vote held during their
annual meeting.
In cases of small corporations these number of offices may look daunting, but in
reality, it is really quite the opposite of what they may perceive. In most states,
some corporations only have one director that can also hold the offices and own
all of the company’s stocks. What this means is that one person can run his own
corporation, serve all the offices of the company, become its sole shareholder,
and also be its director. But as this company grows these positions may be filled
up accordingly as stated on the company by laws.
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You often hear people recommending an LLC business form because it’s a simpler structure, or a corporation because it provides more advantages. But how can you tell the exact difference between a corporation and an LLC, in order to make your decision confidently?
In this article, we believe that the right strategy to make the distinction between the two is to compare a limited liability company to an S corporation, since these business forms can have a common tax plan.
Social Security Tax
Among the aspects that make an S corporation better than a limited liability company is the absence of social security taxes on the businessowners’ profits, specifically for large S corporations. As for the small ones, the Social Security tax can cut a significant amount from the business owner’s profits.
Other Taxes
Besides the Social Security tax, an LLC is proven to outdo S corporations in terms of taxation. While the money borrowed for the company in an LLC can reduce the taxes by increasing the tax base, it is unfortunately not the case in S corporations. Furthermore, the property contributed by any owner to create the LLC is tax-free, whereas a corporation only allows so for contributions provided by owners who hold the most control over the corporation.
Profits and Losses
There are other cases where an LLC business form seems to be more advantageous. An LLC, for instance, can benefit from allocations of profits and losses between its members. However, for an S corporation, the allocations of profits and losses are only accorded based on the percentage through a single class of ownership only.
Increasing Capital
A corporation can easily raise money by selling stocks or going public. But for an LLC, it is mostly not as easy to sell membership interests. This puts the corporate form ahead regarding increasing capital.
Liability Protection
A corporation is known to protect the shareholder’s personal assets no matter the financial situation of the business. Nevertheless, it cannot protect their dividends from creditors. Conversely, it is impossible for creditors to take away the members’ parts of an LLC distributions.
Management Flexibility
Corporations are one of the most regulated business forms. Thus, they certainly come second compared to the management flexibility in an LLC. Since the latter is not as regulated, it is often preferred by business owners thanks to its diverse management options.
Foreign Owners
An LLC can be owned by foreign individuals or corporations to an unlimited number, while the number of members in a corporation cannot surpass a hundred, and they can’t be foreign.
Fringe Benefits
From retirement plans to employee stock ownership, an S corporation allows its employees to take advantage of a wide range of fringe benefits more than any other business structure. These benefits are only taxed for employees, sole proprietors, or owners of over 2%. As for a C corporation, neither stockholders nor employees must pay taxes on fringe benefits.
Securities laws are partly transactional (e.g. when loans are bunched up and sold as a security to a financial institution or an investor group), partly regulatory (e.g. the SEC heavily regulates the issuance of securities), and partly litigation (e.g. when fraud charges have been given to an issuer in connection with the purchase or sale of securities).
Issuance of securities are subject to both federal and state security laws. The Securities Act of 1933 is a federal law that requires securities sold to the public to bear complete information about the seller of the stock as well as making the stock offering available to investors, and having these sold stocks registered with the SEC. The Securities Act of 1934 regulates stock exchange and trading operations. The aim of these laws covering sales of securities is to provide full disclosure of risks involved in the investment to all potential investors and to protect people who put up money to invest in a business. Back in the 1930’s during the great stock market crash many people took their own lives because they were swindled of all their life’s savings, and because of this the US government made sure that these instances will not happen again. This is when Securities lawyers become very valuable in that they help clients navigate these complicated federal and state regulations.
Aside from generating significant cash funds to pay off debts, used for
investments, or for charitable donations, selling shares of stocks can also provide
a surplus that can be used back into the business for purposes of expansion.
Selling part of your business can reduce personal risks and diversify your personal assets. Over time, the selling of shares prepares business owners for the eventuality of succession from a different owner or the possibility of transfer of
ownership that could minimize any tax shocks that could happen to eventual new
owners. Finally, one reason why businesses sell their shares of stocks is when they go through burnout or the unwillingness to make the business grow further.
Aside from purchasing stocks with cash, stocks can also be paid for with
properties or services. Although complex security laws surrounding corporate
stocks do not apply to small businesses, having adequate knowledge regarding
selling of stocks could be beneficial for small business owners who intend to
expand their business enterprise in the future.
These records are usually kept in a ring binder. Any kind of ring binder will do, but it would be advisable to keep all your pertinent records and documents in a specially made corporate kit, especially if you have your corporation’s named embossed on the cover of the kit, in order to have that professional look whenever you conduct your business transactions.
The Corporate Seal
Your corporate seal must be especially made for your corporation. This should contain your corporation’s full name, type of company (LLC, ULC, Corp., etc), the state wherein your company is registered, the year your company was established, and the word “SEAL” located at the middle of your seal. You will use your corporate seal to certify documents that have been agreed upon by your company’s Board of Directors.
Stock Certificates and Offers to Purchase Stock
As a sign of formality and ownership, each person who has been issued a share of stock of your corporation will receive a certificate that bears the company’s name, the state law of which the company was organized, the shareholder’s name, the number, class, and series of the stock that was issued. These must also be duly signed by one or more officers that are designated by your company’s bylaws or your Board of Directors.
In cases where two or more classes or series of stocks have been issued, the following statement should be indicated either on the front or at the back portion of the certificate, “Upon request and without charge, the corporation will provide to the shareholder the preferences, limitations, and relative rights of each class or series, the preferences of any preferred stock, and the board of director’s authority to determine rights of any subsequent classes or series.” In case there would be any restrictions, this should also be stated on the certificate that a copy of the restrictions will be made available free of charge.
Before any stock certificate is issued, purchasers must first submit an Offer to Purchase Stock. This offer is done so that in the event that the company closes or fails, or the value of its stocks drop, the shareholder has the option to write off a portion of the loss as ordinary income, rather than claim it as a total capital loss, which is usually limited to a specific amount that is set by federal law.
Taxes
When a stock is issued, or in cases where it is transferred, a tax levy is sometimes issued in some states. Each state has a different way of calculating the tax that has to be placed upon your corporation. To find out if any such tax was charged, or how to calculate the amount of tax, and how to pay for that tax, it would be best to consult the services of an attorney or a tax professional.
This kind of tax is something that could easily be lowered, but must definitely not be avoided. This can be done by structuring your corporate stock to the minimum tax. This means fewer shares in some states, and in other states it means a lower par value.
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