All corporations keep a permanent record of all documents and paperwork especially if they are legal in nature. Usually, the following documents are kept on file:
- A copy or the original document of the Articles of Incorporation
- Minutes to all meetings
- Records of stocks that have been issued, transferred, and cancelled
- Any fictitious names registered
- All legal matters pertaining to the organization and operation of the corporation
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.
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.