Corporations and How to Make a Corporation Yourself-By Lee R Phillips
“What are corporations?” in 1819 the Chief Justice of the Supreme Court answered the question. He defined a corporation as an artificial being, invisible, intangible, and existing only in contemplation of the law. Ever since then, corporations have been considered individuals under the law.
This means when you make a corporation, the courts will see it as separate entity. It is an artificial legal entity that exists apart from the people who own, manage, control, and operate it. It can make contracts, pay taxes and be liable for its own debts. Corporations exist only because state statutory laws allow these entities to be created.
Limited Liability Shield and Tax Advantages
When you make a corporation you are creating an entity that can give you a limited liability shield and a lot of tax advantages. Corporations and limited liability companies (LLCs) provide their owners with a good liability shield – provided the entity structure is all in order and the maintenance of the entity is all up to snuff.
The “legal structure” of corporations are always the same. However, the “tax structure” can take one of two forms, either a C corporation or an S corporation. The courts look at both the C corporation and the S corporation as the exact same animal. However, the IRS taxes a C corporation under Chapter C of the IRS Code and it taxes an S corporation under Subchapter S of the IRS Code.
How to Make Corporations
You can easily make a corporation by filing “articles of incorporation” with the state where you choose to form you corporation. The articles of incorporation are only a couple of pages long and quite standard state to state. Obviously, the state where you file you articles of incorporation is going to charge you a fee. The fees range from nearly a $1,000 each year in California and New York to about $150 in many states.
A number of states actually have their articles of incorporation forms on the internet, so it is easy to make a corporation. Check the state website where you want to form your corporation. It is usually part of the Secretary of State’s page or the Department of Business Regulations’ page.
Once you have filed the articles of incorporation, you will need to create “bylaws” for your corporation. The bylaws are the most important part of the paperwork required to make a corporation. They are usually about 30 pages long and define all of the protocols that need to be followed when you “operate” your corporation.
Shortly after you file your article of incorporation, you need to tell the IRS how you want your corporation to be taxed. The IRS has two sets of forms, one to request a C corporation tax structure and a different one for an S corporation tax structure.
How to Maintain Corporations
The bylaws set out all of the rules that you need to follow in order to ‘maintain” your corporation. Some of the rules are dictated by the state and others you get to define. You have to follow the rules in exchange for the state giving you the limited liability the corporation offers.
When you get sued, you will want the “corporate shield” to protect you. The judge will have a set of the rules, and he will start down the list. If you didn’t do all of the things you are required to do in order to “maintain” your corporation, the judge will simply say that he can’t use the corporation to protect you. He will “pierce the corporate veil,” and you lose all of the liability shield. You’re personally liable.
Unfortunately, the vast majority of corporations, (C corporations or S corporations) are not maintained and they do not protect the officers and directors. I have a list of 27 key corporate maintenance points the judge will be looking for. You can call me and I’ll send it to you if you want it.
Make a commitment now to maintain your C corporation, S corporation, and LLCs. I talk about the key things you need to do to maintain your corporation in the Business Planning section of the Accumulation and Preservation of Wealth. For example, you have to take minutes in your annual meetings.
The first time I took minutes in a corporate meeting, I sent them off for approval of an old friend attorney. They guy chewed my butt. I had done them all wrong and exposed the C corporation to big liabilities. In the Accumulation and Preservation of Wealth course, I spend an hour with you giving you audio instructions telling you how to take the notes and do all of the other things you need to do to maintain your corporation. It’s not hard, but you can’t afford to pay the lawyer to do it for you, and nobody ever teaches you how to do it. But it’s so important.
The system I have for you will get all of your maintenance items done in less than two hours a year. Can you afford not to protect yourself? People loose all they have worked their whole life for, because they didn’t do what the law required them to do in order to get the “corporate shield” they. The lawyers and websites talk about how to make a corporation, but nobody ever talks about how to keep a corporation.
With my help you can make a corporation and keep your corporation so that it will protect you. Just do it!! You can’t afford not to? See which business structure is right for you.
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