A Primer on Corporations

This page is devoted to corporations in general and to Nevada corporate entities in particular. Why? . . . because I'm a Nevada lawyer. grin Of course, there are lots of other reasons to favor Nevada as the home for your corporate entity. Here's a summary . . .

Corporations are the most common form of limited liability business entity. They are separate legal entities. As long as the company is run properly, the owners or shareholders have no liability for the obligations of the company. Unlike a partnership, this type of entity has perpetual existence. It's existence does not terminate on the death of a shareholder.

The entity begins its existence upon the filing of Articles of Incorporation with the Secretary of State. The Articles of Incorporation might be compared to the constitution of a country. They are the principal organizational document and govern the basis elements of the company. They generally include:

• the name of the company (which must not be the same as the name of any other registered company)
• the amount of authorized capital and the number of shares of authorized stock
• the par value, if any, of the stock
• the names and addresses of the Organizers (the persons forming the company)
• the names and addresses of the initial Board of Directors
• the name and address of the Registered Agent (the person located in the state who is designated as the liaison with the Secretary of State and the person authorized to accept service of process (the summons and complaint in a lawsuit)
• the signatures of the Organizers and the Registered Agent

To learn more about the actual process of incorporating, click here.

Here's the organizational structure:

The shareholders have the right to elect a Board of Directors, which has the power and obligation to operate the corporation on behalf and for the good of the shareholders. Some portion of the Board of Directors is usually elected on a yearly basis, although the Directors may have staggered terms over a period of years. The purpose of the staggered terms is to have some continuity in the makeup of the Board from year to year.

Finally, the Board of Directors has the power to appoint officers, such as the President, Secretary and Treasurer. The officers are charged with running the business on a day by day basis.

An advantage of this form of business entity is that corporation laws have been around for hundreds of years, so there is a large body of law which has developed concerning their formation and operation. There are good legal road maps available to guide the operation of the company and to define the rights and liabilities of all persons dealing with the company, whether they be shareholders, directors, officers or creditors.

Under the full faith and credit provisions of the Constitution of the United States, a Nevada corporation has the right to do business in every state. The laws of mosts states require business entities from another state to register in the local state before doing business.

Incorporation - How to get started

The Corporate Veil - How good is your immunity?

Corporate Taxes - C corp or S corp?

Incorporation forms and fee information for every state - State by State links

If you have questions about business entities, we will be pleased to answer them. Please click here for a no-charge 1/2 hour consultation with Dave Guinan.

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