Corporate Maintenance

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• A corporation is a separate legal entity from its owners created under state law. The defining legal rights and obligations of the corporation are: the ability to sue and be sued, hold assets in its own name, hire agents and sign contracts. In order to retain corporate existence, one must observe certain corporate formalities such as holding an annual meeting, taking corporate minutes, issuing shares and appointing officers.

  Management and Control
  The owners of the corporation are called shareholders. The directors are responsible for long-term management and made the major decisions regarding the corporation. The officers are responsible for day to day operational activities of the corporation and usually consist of the President, Secretary, and Treasurer.
  In addition, a corporation may also have vice presidents and/or assistant secretaries or treasurers. Typically, the authority and responsibilities of each officer is described in the bylaws Liability
  Forming a corporation draws a line between personal and business assets, helping protect your personal assets from risks or debts associated with running a business. Therefore, if a business experiences severe financial difficulties or gets sued, creditors cannot go after personal property such as a home, retirement savings, or any other personal assets. They are limited to the assets of the business.
  Case Study for a C-Corporation
  Gabby and her two best friends, decide to start a company that develops personal budget software for smart phones. They are excellent programmers and developers, not to mention business people, so there is a good chance they will take their company public in the future. They decide they will call their company “G3 Development” and that they will divide all the profits and liabilities of the company equally among the three of them. Since issuing stock and potentially going public is a requirement of Gabby and her friends, they decide to form a general-for-profit corporation or C-Corporation.

• Limited Liability Companies combine the limited liability advantages of corporations with the control and tax advantages of a partnership. While setting up an LLC is more difficult than creating a partnership or sole proprietorship, running one is significantly easier than running a corporation. LLCs are less formal than corporations and do not have the same corporate formality requirements such as having an annual meeting or taking minutes. The entity is taxed like a partnership - income and losses are accounted for on the owner’s individual tax returns. Also, LLCs can be owned by non U.S. citizens/resident aliens and other business entities and have unlimited number of members.

  Management

  Provides flexibility in business organization and management. The owners can be individuals, trusts, partnerships, corporations and non-resident aliens. There are significantly less formalities to maintain an LLC compared to a corporation.
  Liability

  Like shareholders of a corporation, LLC members are generally protected from personal liability for business debts and claims. This means that if the business can't pay a creditor or gets sued, the creditor cannot legally come after the member's personal assets such as a house or car.

  Case Study for a Limited Liability Company (LLC)
  Nathan has been planning on starting a catering business. In anticipation of getting his operation going he has decided to form the company “Nathan’s Nutrition.” He likes the liability protection of a corporation but he doesn’t want to deal with the annual reports, bylaws, distribution of shares, and all the other things that come with operating a corporation. He decides to form a LLC which gives him liability protection similar to a corporation but doesn’t have the formalities of a corporation. The LLC also gives the benefit of having all the profits and losses to pass directly through to him.

• A non-profit corporation often involves an organization whose primary objective is to support some issue or matter of private interest or concern for non-commercial purposes. Examples of non-profit types might relate to the arts, charities, education, politics, religion, research, sports or some other endeavor.

  Case Study for a Non-Profit Corporation
  After a lifelong battle with restless leg syndrome, and dealing with the difficulties of diagnosing and treating this issue, David decided to start a corporation in order to aid those who are working on this cause. Since David’s primary objection is to support medical advances and does not want to gain a profit, he decides to set up a non-profit corporation. Further, by forming a nonprofit corporation, David can apply to the IRS for tax exempt status, thereby making all donations tax deductible.

• I wish to learn about the risks and defects an IDIT has. Can you help ?
  Thank you.H.B.

• this is a good article on corporate maintenance needs.Thank you