How Do I Set-up a Corporation?

A corporation is formed by one or more incorporators signing and filing Articles of Incorporation with the appropriate government agency.  In Ohio that agency is the Secretary of State of Ohio.  The incorporators then solicit and accept subscription agreements from the persons who will be the shareholders of the corporation.  The shareholders sign resolutions approving the corporation’s Code of Regulations and appointing the Directors.  The Directors sign resolutions appointing officers and approving and leases, contracts or other important agreements or arrangements.   The Officers then execute stock certificates evidencing the shares of stock owned by each shareholder. 

At least annually, the shareholders should hold an annual meeting or execute resolutions appointing Directors and approving any extraordinary transactions or events.  At least annually, the Directors should hold an annual meeting or execute resolutions appointing officers,   approving officer salaries, bonuses and other compensation, and approving important agreements, transactions and other matters. 

It is important to hold shareholder and Director meetings at least annually, and keep up with all of the required corporate formalities.  Failure to maintain an up-to-date and orderly corporate record book opens the door for a plaintiff’s attorney to argue that the corporation is a sham, and that the plaintiff should be able to pierce the corporation’s liability shield and collect damages directly from the shareholders.

Hope you found this material helpful.  If you like what you read, pass the information and the website to a friend.  If something you read here raises a question, please contact me at  Jsenney@pselaw.com or 937-223-1130.

AND ONE MORE THING:  Does your business sell products outside the United States?  Does your business have any significant foreign sales or income?  You can reduce the federal income tax rate on such foreign income by setting up a domestic international sales corporation.  Give me a call and ask me how.  Jsenney@pselaw.com or 937-223-1130.