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Do-It-Yourself Incorporation Kit: Michigan Corporation
By Stephen L. Nelson, CPA, MBA (finance), MS (taxation)
This Do-It-Yourself Guide was written to share basic information about formation of corporations and their taxation. The paper is not intended to replace the services of a competent legal, tax or business advisor. If legal or other expert assistance is required, the services of a professional should be sought. Furthermore, while both the publisher and author have made every effort to offer the most current, correct and clearly expressed information possible, inadvertent errors can occur and the rules and regulations governing corporations, c corporations, s corporations, accounting standards, and tax laws often change. Further, the application and impact of rules and laws can vary widely from case to case based upon the unique facts involved. Be careful! CIRCULAR 230 NOTICE: Under recently issued IRS regulations, we must inform you that any U.S. tax advice contained in the body of this white paper was not intended or written to be used, and cannot be used, by the reader for the purpose of avoiding penalties that may be imposed under federal tax law. By regulation, a taxpayer cannot rely on professional advice to avoid federal tax penalties unless that advice is reflected in a comprehensive tax opinion that conforms to strict requirements.
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In this document, I describe how you can, on your own and without the help of an accountant or attorney, set up a Michigan corporation. Specifically, I provide step-by-step instructions for completing several legal and tax documents related to forming a Michigan corporation, including filing the articles of incorporation with the Michigan secretary of state, applying for an Employer Identification Number (EIN) from the Internal Revenue Service, and preparing the S corporation election paperwork which some corporations may choose to file with tax authorities in order to have their corporation treated as an S corporation. Before that discussion, however, I want to talk briefly and in general terms about the legal and tax benefits of a corporation so you can understand better whether incorporation is appropriate in your situation. I also want to provide some basic information about how corporations are taxed. One other comment: This document also includes a sample set of corporate by-laws (see Appendix A) written by attorney Carl Baranowski. You will need corporate by-laws for your corporation. Ideally, you would have a local attorney, conversant in Michigan corporation law and intimately familiar with your business, start with boilerplate corporate by-laws (like those provided in Appendix A) and then customize them so they work for your situation. Practically speaking, many small business owners end up instead using simple sample sets of corporate by-laws as their “real” by-laws. The simple approach ends up saving you money, but the simple approach probably also reduces the legal liability protection. Accordingly, at some point, if legal liability protection is paramount and your budget allows, you should consult with a local attorney. And now on to the meat of our discussion…
The Twin Benefits of a Michigan Corporation
Corporations deliver two huge benefits to Michigan business owners. One benefit is a legal benefit and the other is a tax benefit.
Benefit One: Limited Liability…
The big legal benefit that corporations provide business owners with is liability protection. What this means, practically speaking, is that the business owners are not liable for the debts of the business merely by virtue of their ownership.
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To best understand what this limited liability protection means, however, you need to consider the situation that exists with respect to businesses that are un-incorporated. In a sole proprietorship, for example, the proprietor is responsible for all the debts of the business. If the business signs a contract with some customer or vendor and then breaches the contract or if the business fails to deliver on a financial promise made to some employee, the owner is liable. The owner can’t say, “Oh, sorry, that was my business that made the promise or commitment.” A business organized as a general partnership works the same way. If the business breaches a contract or makes and then breaks a financial promise, the partners in the partnership are liable. These owners can’t say, “Oh, sorry, that was the partnership… not me.” In comparison, with a corporation, an owner (called a stockholder or shareholder) can say, “oh, sorry, that was the corporation’s debt… not me.” Consider what this means for a small business. In a worst case scenario, outside creditors (these outside creditors would obviously include people like the bank and vendors but might also include other people or organizations that you owe money to like customers and employees) might be able to strip the corporation of all its assets to pay a debt or force the corporation to liquidate to pay it debts. But these outside creditors would not be able to look to the corporation’s owners for repayment merely because they own the corporation. Obviously, the legal liability protection provided by a corporation can be extremely valuable. One local attorney I often collaborate with tells his clients that a corporation (as well as its cousin, the limited liability company) protects businesses and investors from the worst case scenario—which in his mind is a “slip and fall” accident on the business’s or investor’s property. With a corporation as the property owner, so says my attorney friend, the “worst case scenario” is liquidation of the corporation. That liquidation means the people who own the corporation wind up with nothing—which isn’t good. But all the owners lose is what they’ve invested in the corporation. In comparison, without a corporation, the business owner’s or investor’s “worst case scenario” if there’s a “slip and fall” accident is that the owner or investor can lose almost everything they own.1 In other words, the business owners or investors could lose not only their investment in the business but many other personal assets. Let me issue a caveat here, however. You may not get as much legal liability protection from a corporation as you want or hope. Say, for example, that you’re a roofing contractor operating as a corporation. If you personally happen to drop a hammer onto the customer’s head during the roofing project, your corporation probably won’t protect
A tangential side note: Even in the worst case scenario, you typically can’t really lose everything. State and federal laws often protect individuals from the claims of creditors. For example, retirement savings may be protected, as well as a certain amount of equity in a home, and even many personal belongings.
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the corporation can provide benefits such as medical insurance. Finally. The cost of these benefits generally count as business deductions for the corporation as long as the corporation doesn’t discriminate in favor of shareholders and as long as the expenses are “ordinary and necessary” business expenses or expressly authorized as Copyright © 2007. business owners may intentionally or unintentionally do things that remove or weaken the legal liability protection that a corporation provides. Benefit Two: Potential Tax Savings… A second benefit of corporations relates to the income and payroll taxes that a business pays or that investors pay. An attorney knowledgeable in Michigan business law can help you increase the liability protection that you gain from using as corporation for your business or investing. And this consultation doesn’t need to be particularly expensive. 2008 by Fast Easy Incorporation Kits web site . I will personally pick up the tab. The customer might reasonably argue that you should have done a better job managing the employee or subcontractor. drops a hammer on the customer’s head? The corporation may offer you some protection in this case. As a general rule. in effect. for example. and so on. which makes things murkier. And this is true even if the only employee is a shareholder. The first potential tax saving associated with incorporating your business applies to what the tax laws call a C corporation. employee housing (in some cases). You may be able to buy an hour or two of time from a good local attorney and get all your corporation and liability-related questions answered. A business owner might give a personal guarantee to a bank or vendor that says. small business corporations provide two tax benefits to their owners. one of your employees or subcontractors. reimbursement of medical expenses. If you’re extremely concerned about the asset protection features of setting up and operating a corporation. In other words. In other words. a modest amount of life insurance. “I guarantee that my corporation will satisfy all of its obligations to you and if it doesn’t. the customer can probably look not only to your corporation for payment of damages related to the dropped hammer but also to you personally. through his or her actions—such as wanton disregard of the corporation’s separate identity or failure to comply with state corporation law—weaken the liability protection provided by a corporation. Here’s what all this means. regularly get an attorney involved in your business or investment planning.” Or a business owner might. A C corporation (but not an S corporation which I discuss next) can typically provide tax-free fringe benefits to all of its employees. What happens if someone working for you. But you may still be personally responsible as the manager of the person dropping the hammer.you from that sort of tort liability. And here’s another example.
000 in a year.000 of profit.000 of profit. If the single shareholder-employee extracts all of the $200. while tax deductions for the corporation. Note: In the case of a sole proprietorship or partners in a partnership. (Those income taxes probably total another $30. each business owner also pays an employment tax equal to roughly 15% on the first $100. Caution: If you want to explore or exploit the tax-free fringe benefits angle in more detail.000 on the second $100.000 of profit and then roughly 3% on any profit above $100.000 a year in tax-free fringe benefits to that employee. In all three of these cases. 2008 by Fast Easy Incorporation Kits web site . the business owner pays roughly $18. and he or she will pay roughly $3.000 of business profit. allow a small corporation’s owners to enjoy some of their business profits tax free. you need to understand a thing or two about the payroll taxes that self-employed people (like sole proprietors and partners in partners) pay and that regular C corporations and their employees pay.000 of business profit. Yet those benefits.000 or $40. In the case of a shareholder-employee in a corporation. In addition to income tax. And this would mean that the annual tax savings would very likely run between $5.000 on the second $100. the employment taxes are called Social Security and Medicare taxes. Tax-free fringe benefits. then.000 each year. But—and here’s the neat thing—the deductions aren’t taxed to employees.000 in tax on the first $100. suppose a sole proprietor.000 of business profit and $3. A corporation also affords its owners a second potential tax saving opportunity. This proprietor or partner will pay roughly $15. money that a business owner makes in an active trade or business is not subject just to income taxes.000. the corporation might be providing $20. In a situation where a one-employee-one-shareholder corporation provides full health benefits and housing to its single shareholder-employee.) Copyright © 2007. would not be taxable to the employee.000 in tax on the first $100.000 or $30. Again.000 and $10. a partner in a partnership.deductions by tax laws. Subchapter S status.000 in corporate profit as salary—and this would probably be the most common approach for a small business—the shareholder (either directly or indirectly) also pays roughly $15. the employment taxes are called self-employment taxes. you definitely want to confer with a local tax practitioner—an accountant or attorney who can help you identify which tax-free fringe benefits make the most sense in your specific situation. In a nutshell.000 of employment taxes. To understand this benefit. and I’m being a little rough here. To show you how the employment taxes work. or a single shareholder in a regular corporation (called a C corporation by tax laws) makes $200. though. note that these employment taxes are in addition to the income taxes he or she pays on the $200.000.
While a sole proprietorship or informal real estate partnership may be able to keep its bookkeeping and income tax return preparation very simple. or S. The bank may charge $10.000 in wages. an S corporation saves the shareholder-employee roughly $9. a corporation needs to file its own tax return. So an obvious question is “Why wouldn’t everyone become a corporation?” Perhaps predictably. Related to this point. bump the prices they charge you. 2008 by Fast Easy Incorporation Kits web site . extra payroll tax (the Federal Unemployment Tax). Another increase in administrative complexity is that the corporation will need to do quarterly and annual payroll tax accounting—even if the only employee is the owner. As compared to the case where the same business makes $200. a partnership or a C corporation. The Drawbacks of the Corporation When you consider the benefits of a corporation—limited business liability and tremendous potential tax savings—you seemingly have almost the perfect business entity choice. In this case. or even more each month.000 a year but is operated as a sole proprietorship. corporation. making an owner a corporate employee results in a new. For example. The accountant and insurance company may. This tax equals as much as 6. In this case. the corporation probably sets the shareholder-employee’s wages to a low but reasonable level. And this tax return may cost anywhere from a few hundred dollars to a few thousand dollars annually. accounting and insurance costs. $20. For starters. the employment tax equals 15% of only the $60. similarly.000 annually.000 annually. the bank account for a corporation probably won’t be free. Copyright © 2007.000.Things work differently if the corporation elects to be treated as a Subchapter S. Increased Administrative Complexity… As a general rule. there are costs and headaches associated with incorporating.2% of the first $7. This increase in administrative complexity adds to your costs and your work. or $9. a corporation increases the complexity and workload of administering your business. a corporation will probably increase your banking.000 an employer pays individual employees in wages. or $434 per employee. Perhaps this means wages equal to $60. while the bank account for a sole proprietorship or informal partnership may be free if you keep a large-enough balance.
You’ll also need to keep good minutes of these meetings. in any situation that isn’t like one of the preceding examples. Fortunately. you may spend money on publications like this. Finally. You will need to print new letterhead. Similarly. a corporation will mean that you need to have a board of directors (which will need to meet regularly such as monthly. For example. And the control requirement is met when a partnership incorporates a partnership. however. You may buy the services of accountants and attorneys. such as where you’ve got a larger group of people who are Copyright © 2007. if a sole proprietor incorporates his or her business. And exchanges represent taxable events unless tax laws say otherwise. the control requirement is met when a proprietor incorporates his or her business. But I can give a birds-eye view of the subject—especially as tax laws apply to small businesses and how they differ from the simpler rules for sole proprietorships and small partnerships Starting a Corporation You can usually incorporate a business without suffering any tax effect.A corporation may involve several hundred or even a few thousand dollars of startup expense. quarterly or annually) and annual stockholders meetings. And you will need to comply with either your corporate by-laws or state law as far as giving directors and shareholders advance notice of these meetings. tax laws do “say otherwise” in the typical cases of a sole proprietor or partnership incorporating the business. Obviously. no tax effect should occur merely because the proprietorship has become a corporation. You may need to consult a tax practitioner. business cards. again. A Slightly Different Set of Tax Rules… I also want to briefly summarize here the rules about how corporations are taxed. if a partnership incorporates its business. Here’s why: When someone contributes property to a corporation in exchange for the corporation’s stock—this is what happens when you incorporate a business—that transaction is technically an exchange. and envelopes (if you use these) that use the new corporation’s name in order to show the world that you’re now operating as a corporation. I can’t summarize all of the tax law applicable to corporations in a few paragraphs. In other cases. 2008 by Fast Easy Incorporation Kits web site . If the people incorporating the business control the business after the incorporation—control means they own at least 80% of each class of stock in the new corporation—the transfer of property for stock that occurs during the incorporation isn’t taxable. Obviously. For example. no tax effect should occur merely because the partnership has become a corporation.
Let me also make one other point about incorporating a business. Anytime the corporation earns or receives income. The mechanics of how this works are beyond the scope of this short discussion. many small corporations attempt to extract all of the business profits in the form of salary. called C corporations.000 – taxed at 15% $50. meeting the “control after incorporation” requirement may not be quite so easy. the excess of the liabilities over the basis of the property gets counted as income or gain. How C Corporations Get Taxed Regular corporations. At the time I’m writing this.001 to $335.000 – taxed at 34% Copyright © 2007. If a sole proprietor or partnership incorporates a business and. corporate income is taxed for federal tax purposes according to the following tax rate schedule: $0 to $50. Specifically.contributing property to the corporation in stages. The person contributing the truck gets taxed on the $10.001 to $75. for example. and the person contributing the property and transferring the liabilities will probably be taxed on the liabilities contributed. For example. a person offloads personal debt into the corporation—such as credit card debts that stem from personal charges—all of the liabilities transferred are considered (essentially) as payment made (or boot paid) by the corporation for the property contributed. But the effect is pretty easy to describe: The exchange in this case looks to the tax man like a sale. a corporation counts income and deductions the same way that a sole proprietorship or partnership does.000) exceed the basis of the property contributed ($0).000 – taxed at 39% $335. Case #2: If a person offloads more debt into the corporation than the depreciated basis of the property contributed to the corporation. get taxed on their income. In this case.000.000. transferring liabilities as part of incorporation triggers taxes in two cases: Case #1: If. 2008 by Fast Easy Incorporation Kits web site . the business can count that deduction in its accounting records.001 to $10.001 to $100. Corporation Income and Corporation Deductions As a generalization. as part of incorporating a business. For this reason. the business needs to count that income in its accounting records. Anytime the corporation incurs or pays some expense that is ordinary and necessary for its business. suppose someone starts a corporation solely by contributing a fully depreciated truck and that there’s a bank loan on the truck equal to $10.000. as part of the incorporation.000 – taxed at 34% $100.000 – taxed at 25% $75. the transferred liabilities ($10. that transfer of liabilities may trigger taxes. transfers liabilities to the corporation.
generally get taxed at a 15% federal rate.000—based on the states in which the corporation sells its products or services. and a 34% federal tax on the last $25. Finally. then another $50. or $100. Finally.333 – taxed at 38% Over $18.000 – taxed at 35% $15. Here’s a simple example of how this works. if the corporation has half of its property in Michigan and half of its property in California. the corporation pays $22. For example.000. of the profit.000. Multi-State Taxation of Corporations A corporation also pays state income taxes on the profits it earns in another state (if the state taxes corporate profits). the apportionment formula apportions one third of the profit—the final $100. Suppose a corporation (and it doesn’t matter whether the corporation is a C corporation or an S corporation) makes $300.750 in corporate income taxes on the first $100.001 to $15.$10. California. A quick editorial comment: The idea of incorporating a business in another state is often touted by people who don’t understand how multi-state corporate taxation works. Corporate dividends paid by a C corporation. If you work out the math.333 – taxed at 35% A corporation that makes $100.000. those shareholders pay income tax on the dividend. Michigan and Oregon. for example. if the corporation’s payroll is evenly split between Nevada. A Michigan corporation (as does any other business) also pays the Single Business Tax. The three-factor apportionment formula apportions one-third of the $300. But Copyright © 2007. If the corporation makes half of its sales in Michigan and half in Washington. In this case.000 of profit is apportioned to Michigan and $50. based on the states in which the corporation owns property. If a corporation operates in multiple states. that if a C corporation pays a dividend to its shareholders out of its profits. Suppose. the business still owes those states income tax on its profits. $50. does business in other states that tax corporate profits.000. which is also a Michigan corporation.000 of profit is apportioned to Washington. a 25% federal tax on the next $25. note.333.000.000—based on the payroll paid in the states where the business employs people. pays a 15% federal tax on the first $50. for example.000 of profit is apportioned to each of these four states.000.000. 2008 by Fast Easy Incorporation Kits web site . for example.000.333. The apportionment formula apportions one third of the profit—another $100. the corporation apportions its profit—usually using something called a three-factor formula. $25. that a Michigan business. for example.000 of profit. too.000. For example.000 of profit is apportioned to Michigan and $50.000.001 to $18.000 of profit is apportioned to California.
After the previously taxed profits are exhausted and to the extent of any capital contributed to the corporation. the corporation economically reduces business risk. so I won’t bang the LLC drum again. a limited liability company is a “lite” version of a corporation. In these cases. You’ll need to carefully consider the benefits and costs as they add up in your specific situation. or LLC. a C corporation can 2 Most business advisors. as part of stopping business. I will share these thoughts. gives you all the same liability protection. 2008 by Fast Easy Incorporation Kits web site . presumably you’ve already read this sort of comment from me before. That said. the shareholders pay regular dividend tax rates (usually 15%) on the money. If the corporation distributes still more money to a shareholder—money above and beyond the previously tax profits and the original capital contributions—those distributions are taxed at capital gains tax rates (usually 15%). the part-time business that generates a few thousand dollars of profit probably is not big enough or risky enough to shoulder the hundreds of dollars of cost (or more) incurred in setting up and operating a corporation. but burdens you with less red tape. In my opinion. paying off all of the corporation’s debts. the incorporation option is uneconomical for very small businesses. the shareholders need to liquidate the corporation by selling all of the corporation’s assets. To the extent that distributions made to shareholders come from previously taxed profits. think that the limited liability company is often a better choice for small businesses than a corporation. any business that’s producing profits that equal or exceed what the owner would earn if he or she worked as an employee for someone else probably should operate as a corporation or as an limited liability company2. and then distributing all of the cash that’s still left over to the shareholders. Copyright © 2007. employs people. however. Balancing the Benefits of Incorporation with the Drawbacks So where does all this leave you? How should you balance the big benefits of forming a corporation with the extra administrative complexity and the burden of more complicated and extra accounting? Unfortunately. As an added bonus. Stopping a Corporation If a corporation stops doing business. an additional tax benefit (flexibility). a corporation distributes property rather than cash. On the other hand. For example. I can’t give you a one-size-fits-all answer. if the corporation distributes appreciated property (like real estate) to a shareholder. the corporation pays tax on the appreciation. the corporation generally owes taxes to that state—either income taxes (which most states charge) or gross receipts taxes. For example.business owners need to understand that if a corporation owns property. or makes sales in a state. the corporation recognizes a gain or loss equal to the difference between the property’s fair market value and the basis of the property to the corporation. A limited liability company. the shareholders get tax-free returns of capital. In essence. One final note: If. me included.
pdf 3. 2008 by Fast Easy Incorporation Kits web site . Enter your business or investment name onto the lines provided. The URL. "Incorporated". Copyright © 2007.state. you may want to check if the corporation name you want to use is even available. 2. You can search for a similarly named corporation using the Department of Labor and Economic Growth online database at: http://www. "Corp. Download the Articles of Incorporation Form from the Michigan Department of State’s Corporation Forms web site.4) is as shown below. "Co. or web page address.often produce tax savings to the business owner because shareholder-employers can get tax-free fringe benefits.mi. Limited". "Company". As a first step. “Acme Explosives Corporation”) The corporate name of a domestic profit corporation is required to contain one of the following words or abbreviations: "Corporation". http://www." or "Ltd.us/bcs_corp/sr_corp.". Or alternatively.us/bcsc/forms/corp/corp/500. Acme Explosives Company Acme Explosives Co. you can also formally propose an corporation name by writing to the Michigan Department of State and inquiring about an corporation name or several names. and then print this form.".".dleg.dleg. all of the following names should be acceptable: Acme Explosives Corporation Acme Explosives Corp.mi. Forming the Michigan Corporation The actual steps you take to form a Michigan state corporation are almost comically simple. "Inc. Here’s what you do: 1.state. (Optional) Check if the corporation name you want is available.asp Alternatively. For example. Identify the name you want to use for your new corporation. Acme Explosives Incorporated Acme Explosives Inc. for this form (see Figure 1 . an S corporation can often save the owners thousands of dollars a year in income or payroll taxes. Acme Explosives Limited Acme Explosives Ltd. (I used the example name.
2008 by Fast Easy Incorporation Kits web site . The incorporators need to sign their names. 5. List the name of the resident agent. Attach additional pages if needed. 6. this will be you. Add Additional Information (Optional) In the provided space. Provide the agent name. Provide address of your corporation The State of Michigan asks for the street location of your corporation. Finally.) 7. For most corporations. The mailing address may be a PO Box. write any additional Articles or continuation of previous Articles. provide the mailing address as well. This will be you. you will also need to place your name as the one remitting the fees and also your name and business telephone number as the one that prepared the documents. Additionally. Sign the form. List those that are incorporating your business. Also provide the incorporators mailing address. Provide the incorporators names. The street location address may not be a PO Box. sign and date the bottom of the form. Copyright © 2007. (A PO Box is acceptable. if the street location and the mailing address are different. On the lines following the signatures.4. 8.
2008 by Fast Easy Incorporation Kits web site .Figure 1: Page 1 of Michigan Articles of Incorporation document Copyright © 2007.
Figure 2: Page 2 of Michigan Articles of Incorporation document Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .
Figure 3: Page 3 of Michigan Articles of Incorporation document Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .
Figure 4: Page 4 of Michigan Articles of Incorporation document Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .
but in general.8. Tip: If you want to use stock certificates.Corporation Division P. at the time of this writing. 2008 by Fast Easy Incorporation Kits web site . the local office supplies store probably carries or will allow you to order blank stock certificates and (if you want or need it) a corporate seal to “seal” the certificates. MI 48909 You can also deliver your articles of organization in person to 2501 Woodlake Circle Okemos. however. Submit the Corporation Application After you complete the Articles of Incorporation document mail the document and a check for $60 to: Michigan Department of Labor & Economic Growth Bureau of Commercial Services . As a generalization. Issuing Stock. $500 for 2 hour service. you can use uncertificated stock. Box 30054 Lansing. The sample corporate by-laws do allow you to use uncertificated stock. stock for which you don’t issue stock certificates—is probably easiest. you can pay $1000 for one hour service. Processing lead times vary. uncertificated stock— in other words. or $100 for same day service. And especially in the case where you are setting up a one-shareholder corporation which you will own and operate. 2. Electing Directors and Officers After the secretary of state certifies your corporation—and at this point.O. it takes several weeks to get your corporation certificate back from the Secretary of State’s office. You need to hold a stockholders meeting to elect a board of directors in accordance with your corporate by-laws. Copyright © 2007. You need to issue stock to the shareholders contributing cash or property. MI Telephone: (517) 241-6470 Fees may be paid by VISA or Mastercard when delivered in person. your corporation legally exists—you still need to perform three other startup tasks: 1. You need to follow your corporate by-laws as to how this process works. Note that you can pay extra money to have your articles of organization filed in an expedited manner. For example. which simply means that someone (perhaps you) contributes cash or property to the corporation and then you simply keep a record of the stockholder’s shares as part of your corporate records.
3. At this initial board meeting. Accordingly. you’ll want to identify and then acquire the necessary permits and licenses. you can't file an electronic return. or pass an IRS Taxpayer Identification Number matching program. and file any tax returns required for your corporation such as income tax returns and payroll tax returns. if you’re incorporating principally to minimize your legal liability. treasurer. apply for business licenses. secretary and so on. identifies your business entity and often allows you to do things like open a bank account. Until your EIN is added to the permanent records. if you do need an EIN. Caution: The IRS takes up to two weeks to make your new EIN part of its permanent records. The State of Michigan provides a web site that gives information about many (if not most) business licensing requirements: http://www. vice president.org/medc/services/license/ You can also usually get local city business license information by calling city government offices in the town in which you plan to operate your business. among other items. and according to your corporate by-laws. online EIN application. many cities also have business permit and license requirements. Michigan requires a license of businesses that operate in the state. you want to do all this exactly right. Licensing a Business in Michigan As you probably know if you’ve worked or run a business in Michigan. An EIN. or EIN. On the other hand.michigan. your bank will probably also require the board of directors to approve setting up a bank account. Your board of directors needs to hold a board of directors meeting in which. the board elects officers to the roles of president. also known as a Federal Tax Identification Number. for your new corporation. apply as soon as possible! Applying for a New EIN using the Online EIN Application The easiest way to get an EIN number is through the interview-style. An observation: You typically do not need to be painstakingly precise about these tasks if you’re incorporating for tax reasons—if you’re incorporating to get tax-free fringe benefits out of a C corporation or if you’re incorporating to get the employment-tax savings of an S corporation. Copyright © 2007. make an electronic payment. 2008 by Fast Easy Incorporation Kits web site . If you’ve set up an corporation for a business. Getting an EIN for Your New Corporation You will need to get an Employer Identification Number. In addition.
click the "Corporations" button. Note: The IRS web site supplies definitions for most of the terms used in the online EIN application.irs. When the online EIN application says "You have chosen Corporations" and asks what type of corporation. 2008 by Fast Easy Incorporation Kits web site . as well as tax reporting requirements. Eastern time Fortunately. you can click on it to see a definition in a new window. to 12:00 a.jsp Scroll to the bottom of the page and click the “Begin Application” button.m. At the time I'm writing this (spring of 2008). When the online EIN application says "You have chosen Corporations" and asks what type of corporation. click the "S Corporation" button. click the "Corporations" button. Here are the precise steps for completing the online EIN application: 1.m. you also do not need special computer skills to complete the online EIN application. If a word or phrase appears blue and underlined. to 9:00 p. click the "Corporations" button. Copyright © 2007. Clicking on these definitions will not halt the progress of your application.m. Go to the IRS website. This step is very important because each type of legal and tax structure has different rules and regulations. If your new corporation will be treated for tax purposes as an S corporation.m. 2. The online EIN application asks questions and you simply provide the answers by filling in the blanks and checking boxes and buttons. Identify the legal and tax structures of your business entity. All you need to have is Internet access and a current Internet browser.Friday 6:00 a. What's more. Eastern time Sunday 7:00 p. also known as a C corporation.gov/modiein/individual/index. Eastern time Saturday 6:00 a. Go to the IRS online EIN application web page to begin the EIN online application: https://sa2.The online EIN application is not available 24 hours a day. to 12:30 a. If your new corporation will be treated for tax purposes as a regular corporation.m. you do not need special software to complete the online EIN application.www4.m. the IRS makes its online EIN application available according to this schedule: Monday .
owner or general partner. if you use a middle initial. Click the “Continue” button. including name and Social Security or Individual Tax Identification Number. Note: If the contact person is a nonresident alien and therefore doesn't have a Social Security Number. Don't use any punctuation other than a hyphen (-) and ampersand (&) in the name. If the IRS sends a letter to the corporation. The IRS also wants information about the principal officer. Your choices are: § § § § § Started a New Business Hired Employees Banking Purposes Changed Type of Organization Purchased Active Business In general. they send the letter to the corporation in care of the person. the online EIN application brings you to a page that explains your choice. Click “Continue” after you identify the type of primary member or principal officer. do not place a period after that initial. Copyright © 2007. Application for IRS Individual Taxpayer Identification Number form.After you indicate what type of legal and tax structure you've chosen for the new entity. Go to the bottom of this page and click the “Continue” button. You need to designate a contact person--or what the online EIN application calls a principal officer. The IRS considers the contact person to be the individual or business responsible for tax matters. you should identify a corporation officer (probably the president or treasurer) as the person the IRS should contact when it has questions. 4. State why you are requesting an EIN. you will click the “Started a New Business” button. When prompted by the online EIN application. explain why you are requesting an EIN. Identify and describe a contact person of the corporation. 2008 by Fast Easy Incorporation Kits web site . for example. For instance. the person may be able to first obtain an Individual Tax Identification Number by completing a Form W-7. 3. In a small corporation.
suite numbers.. you need to provide the name of the corporation. The IRS will then validate the address you’ve provided with the United States Postal Service’s database and offer you an opportunity to make any changes to the address. identify the state where the articles of organization or articles of incorporation were filed. you will need to provide the corporation's start date. Provide the corporation's business location.5. the online EIN application allows only two special punctuation characters: hyphen (-) and ampersand (&). The online EIN application automatically fills in the county and state based on the physical address previously entered. Again. address and may not be a PO box. However. the trade name (if any). apartment numbers. The final question on this page is whether you have an address different from the physical location where you wish to have your mail sent. the name may not contain an ending such as LLC. the state where the articles of organization or formation are filed. the county and state where the corporation is located. Corp. Do not use any punctuation except for a hyphen or a back slash. You need to provide a physical address of your corporation. you should verify that both of these bits of information are correct. If your address does not fit in 35 characters. This is the date on which the entity began doing business or will begin doing business. if any. When prompted. Provide legal and trade name information about your corporation. again when prompted. please make sure you provide the most essential address information (i. PLLC. The name you provide as the legal name of your corporation should match the articles of organization or articles of incorporation. 6. etc). Use the pull-down menu to select a month and year. If you use a trade name. Click the “Continue” button. A trade name or "doing business as" name is another name under which the business or individual operates. You will also be required to provide a phone number. however. This address must be a U. Copyright © 2007. you will be taken to a page to provide that address. if necessary. Finally.S. or Inc. If you do. Note: IRS systems only allow 35 characters on the street address line. and the corporation start date. This is typically the same state as the corporation's physical address. LC.e. When prompted by the online EIN application. You can also provide a trade name. 2008 by Fast Easy Incorporation Kits web site .
Click the “Continue” button. Read the questions and answer them. 9. Copyright © 2007. the online EIN application asks a series of questions about vehicles. 2008 by Fast Easy Incorporation Kits web site . Then click the “Continue” button. This may take up to four weeks. choose a category that best describes your business. the IRS will send it to the mailing address you provided. you will be able to view the letter immediately and it will not be mailed to you. click on the “Other” button on this page and then type in what your corporation will do. you can click on that category for a further explanation. You can receive your EIN confirmation letter online or by mail.html. Note. For most people. If none of these options fit. If none of the categories fit. Indicate whether the corporation is subject to special federal excise taxes.adobe. If you choose to receive the letter by mail. Click the “Continue” button.com/products/acrobat/readstep2. that you will need to have the Adobe Reader program installed on your computer. 7. After you provide the corporation name. gambling. If you choose to receive it online. This program can be downloaded for free from: http://www. tobacco and firearms. State what your corporation does. click on "Other" and then click the “Continue” button. 8. the answer will be “No” to all four questions. If you aren’t sure what a category includes. though. If you choose “Other” you will be taken to a second page of options. quarterly federal excise tax returns. and alcohol. Click the “Continue” button. State How You Would Like to Receive Your EIN Confirmation Letter. address and start date information. When prompted.
For example.gov web site and fill out the form as best you can before calling the number just given. At the time I'm writing this document.gov/pub/irs-pdf/iss4. "Application for an Employer Identification Number. local time.10. . Monday through Friday. online EIN application described in the preceding paragraphs.m. Tell the assistor you received an EIN from the Internet but can't remember it.pdf Applying for a New EIN by Telephone You can also obtain an EIN immediately by calling (800) 829-4933. However.m. Then." from www. however. Copyright © 2007. The hours of operation are 7:00 a. complete it.pdf The web address for the SS-4 form instructions is: http://www. start a new application. the web address for the SS-4 form is: http://www. Note: The unique prefixes 20 and 26 identify the EIN as a number issued via the Internet. If any of the information is incorrect. This process can take up to two minutes. the IRS also provides other procedures for obtaining an EIN. Verify Your Information. click the “Submit” button to receive your EIN. Print the summary page and check the information for errors. 2008 by Fast Easy Incorporation Kits web site . call (800) 829-4933 and select EIN from the list of options in order to speak with an IRS employee.10:00 p.irs.gov/pub/irs-pdf/fss4.gov. Before calling for an EIN. and then mail or fax the completed SS-4 to the appropriate address or fax number.irs. you really should retrieve a copy of the SS-4 form and form instructions from the www. after you determine the information is correct. If you forget your EIN number.irs. Applying for a New EIN using the Paper SS-4 Form As mentioned. The last page of the online EIN application summarizes your information. you can download a paper copy of the Form SS-4.irs. the easiest way to get an EIN number is through the interview-style.
3 Caution: I want to caution you one last time about making the S election: Before you elect. you file Form 2553 with the Internal Revenue Service within 75 days from the start of the year. As compared to a regular corporation. 2008 by Fast Easy Incorporation Kits web site . California. Idaho.4 However. make sure you understand how S corporation taxation differs from sole proprietorship or partnership taxation by carefully reviewing the information provided earlier in this ebook and at my do-it-yourself incorporation web sites. citizens or permanent residents. Texas.irs.gov web site. and (sometimes) substantial payroll tax savings. To complete and file the IRS Form 2553.com/taxationofcorporations. you need to file the election by August 15. Enough said. New Mexico. S corporations offer their owners and shareholder-employees some wonderful tax planning opportunities. a corporation must meet certain eligibility requirements. (1) all shareholders (and shareholder spouses residing in community property states like Arizona.htm.Electing S Corporation Treatment for a Corporation A corporation may elect to be treated as a Subchapter S corporation. citizens or permanent residents. called a C corporation.fasteasyincorporationkits. 4 You can get basic tax information on S corporations by visiting www. At the time I'm writing this. (2) the corporation must have only one “class” of stock ownership treating all stockholders in the same way when it comes to distributions of profits and capital. (3) the corporation generally can’t have more than 100 shareholders (except that families of shareholders count as one shareholder for purposes of this test). also known as an S corporation. the precise web address for the 2553 form is: 3 The IRS may allow you to make a late S election. Download the election forms. including pass-through of net operating losses. Nevada.com and from the http://www. S corporations often save the small business owner significant amounts of federal corporation income tax and payroll taxes. Washington and Wisconsin) must consent to the S election. in other words. To make the election to be treated as an S corporation. Copyright © 2007. many tax traps exist for the unwary and the careless.S. You will want to contact them or a knowledgeable local tax practitioner for current information about any “late Subchapter S election procedures” procedure.SCorporationsExplained.S. If you want an S election to be effective as of January 1. estates of U. In a nutshell. Get the IRS 2553 form from the www. If you want an S election to be effective as of June 1 (because that’s the incorporation date and the point at which the corporation’s first year states). no federal corporate income tax. Louisiana. and certain trusts and charities. follow these steps: 1. you need to file the election by March 15. and (4) shareholders must generally be either U. In order to become an S corporation.
to also grab an up-to-date copy of the form instructions.gov/pub/irs-pdf/f2553. if you're going to grab an up-to-date copy of the form.gov/pub/irs-pdf/i2553. The precise web address for the 2553 instructions at the time I'm writing this is: http://www.http://www.irs.pdf Copyright © 2007.pdf It's also not a bad idea.irs. 2008 by Fast Easy Incorporation Kits web site .
Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .Figure 5: Page 1 of an example completed 2553 Form.
and the employer identification number. make an S election effective as of the start of the year (typically January 1). almost certainly want to mark the Calendar Year option in box F. You should confer with a knowledgeable tax practitioner. You shouldn't need to use this space if you're filing the election on time. in the block labeled “Type Or Print. Specify that the S corporation’s tax year will end on December 31. or on the last day of September. the effective date of the S election is the incorporation date. Enter your name and telephone information into Box H. You can also. however. city and state. Instead. October or November—only complicates your tax accounting and produces no real benefit for you. the IRS provides space for you to explain why you're filing a late 2553 election. Copyright © 2007. At the very top of the form (see Figure 5). However. you should not do this using a do-it-yourself approach. address.” you enter the name of the corporation. Note: In the area beneath box H. you shouldn’t make the S election yourself. the new S corporation may be subject to special taxes and also be subject to several accounting rules too complicated for a doit-yourselfer. October. Note. Note: If you think you want a non-calendar fiscal year end. 3. You also need to enter the date of incorporation (which should be the election date if you’re elected S status from the very beginning) and the state in which the corporation was formed. 4. 5. the street address. Enter the effective date of your S election into Box E. S corporation fiscal years can end on December 31. People use this space when they miss the deadline and then need to file the 2553 form late with the actual S corporation 1120S return. When corporations become S corporations after being a C corporation. however. you should confer with a local tax practitioner—an attorney or accountant who specializes in tax law—and go over the specifics of your situation. and EIN information. however. that the effective date can not be more than 75 days before the date on which you’re making the election (typically March 15). Note: You want to mark one of the applicable checkboxes in Box D if after receiving its EIN the corporation changed either its name or address. Typically. Accordingly.2. Provide the corporation’s name. This tells the IRS who to call if they have questions about the S election. or November. 2008 by Fast Easy Incorporation Kits web site . Having a non-calendar fiscal year—an accounting year that ends in September. Tip: You can elect Subchapter S status for a corporation that’s previously operated as a regular C corporation. you probably.
Note that in the case of non-shareholder spouse. However. Name and get signatures from each shareholder and. if any of your shareholders resides in a community property state (Arizona. and N to name each shareholder in the new S corporation. use columns J.My suggestion. Louisiana. you can enter those percentages into column L. California. and you want to have someone who understands the most current special procedures do the election. no stock is owned so a “NA” for “not applicable” can go into the Number Of Shares column and you can just put something like “spouse” into the Date column. you probably want to pay a lawyer. 6. L. if needed. If you've already goofed up the S election deadline. certified public accountant or enrolled agent who specializes in S corporations to fix your election. You need to enter each shareholder’s social security number into column M. Texas. New Mexico. Wisconsin and sometimes Alaska and Puerto Rico). Nevada. 7. is that you not try to file a late election yourself. On page 2 of the 2553 form (see Figure 6). the spouse of a shareholder must also sign the S election even if the spouse doesn’t own shares or an interest in the S corporation. Sign the S election Form. 2008 by Fast Easy Incorporation Kits web site . K. enter the month and day that each shareholder’s tax year years. M. Copyright © 2007. The IRS typically has special procedures for making these late elections. Finally. You need to provide each shareholder name and address in column J. by the way. You’ll also need to sign and date the S election 2553 Form at the bottom of page 1 where the form asks for the signature and title of an officer. If owners don’t hold shares but only percentage interests. Idaho. (This should be December 31 in the case of most individuals. Washington. Note: You won't need to worry about the third page of the 2553 form (see Figure 7). you should include the blank third page in the envelope you mail or in the fax you send the IRS simply to show them the page is blank. shareholder spouse. You must use column L to identify the number of shares that each shareholder holds.) As mentioned earlier in this ebook. You need to have each shareholder sign and date the S election in column K.
Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .Figure 6: Page 2 of an example completed 2553 Form.
2008 by Fast Easy Incorporation Kits web site .Figure 7: Page 3 of an example completed 2553 Form. Copyright © 2007.
Nebraska. Georgia. Rhode Island. Certified mail with a delivery receipt isn't a bad idea. Ohio. Louisiana. 2008 by Fast Easy Incorporation Kits web site . I used to suggest that people mail the 2553 form using certified mail with a delivery receipt. Illinois. Oregon. South Carolina. Kansas. cross your fingers and then make a late election via mail if there's a deadline problem. District of Columbia. Wisconsin Alabama. attempt to immediately resolve any problems by telephoning the Secretary of State’s office or the local IRS office. Mississippi. Maryland. New York. Utah. Florida. Colorado. California. Idaho. Oklahoma. I want to share a handful of quick comments: 1. Indiana. Delaware. OH 45999 Fax: (859) 669-5748 Department of Treasury Internal Revenue Service Center Ogden. If your principal business. Iowa. Arkansas. Montana. South Dakota. Wyoming Then use the following mailing address or fax number to submit 2553 Department of Treasury Internal Revenue Service Center Cincinnati.8. Washington. New Hampshire. you can see which mailing address or fax number you can use for your state using the table below. West Virginia. If you have trouble getting the State of California to process your articles of incorporation or getting the Internal Revenue Service to process your SS-4 or 2553 Forms. Missouri. New Jersey. Fax or Mail the 2553 Form to make the federal S election. North Carolina. Arizona. you can often use a copy of the 2553 Form and your certified mail delivery receipt to prove a timely election—even if the March 15th deadline has past. North Dakota. Vermont. Michigan. if you act immediately you can often still fix a problem before the election deadlines expire. Massachusetts. UT 84201 Fax: (801)-620-7116 Some Closing Caveats and Comments Before I end this short booklet. Tennessee. In any case. the IRS is so forgiving about late S elections that it's probably just as easy to fax the completed 2553 form. New Mexico. Kentucky. I made this routine suggestion because if you mail the 2553 Form using certified mail with a delivery receipt and the IRS service center loses the 2553 Form. Pennsylvania. Texas. but nowadays. Copyright © 2007. Nevada. Alaska. Virginia. Minnesota. Hawaii. office or agency address is located in state of: Connecticut. Especially with the IRS. Maine.
5. Note that with good salary data. give up on the “do-it-yourself” approach and. Corporation tax returns for both C and S corporations are due 75 days after the end of the tax year.000 in payroll taxes. 3.” year that ends on the last day of any month of the year. Government’s Bureau of Labor Statistics. you should probably assume that the IRS will challenge an unreasonably low or high salary. if your corporation begins doing business in. Don’t put assets that may appreciate (such as real estate) into a corporation without consulting a knowledgeable tax attorney or a CPA. My strong suggestion to my clients is that they collect independent salary data to support what their S corporation pays shareholderemployees in wages. such as from the U. In other words. If you can’t resolve the problems yourself. Something you should know now. however. you will need a certified public accountant or enrolled agent to prepare a corporate tax return for your new corporation. The corporate tax returns (the 1120 tax return for a regular corporation and the 1120-S tax return for an S corporation) are too complicated to do yourself—even if you buy tax preparation software. For corporations that use a calendar year ending December 31. say. a smart person who’s careful can work through the paperwork themselves. for example. Be aware that if your new corporation operates in states other than California you’ll have corporate registration and business licensing requirements to meet in those other states. I mentioned this before. In fact. The “cost” of fouling up an S election. 6. S corporations may be able to use a non-calendar year. can be several thousand dollars a year. or “fiscal. C corporations. For example.2. before you finish setting up your corporation: In general. 7. Copyright © 2007. a regular C corporation can often have an accounting. enlist the services of a local professional. instead. but will want to stick with a calendar year because a non-calendar year only complicates your tax accounting and means you’re paying your tax accountant more money for your tax return. but you also shouldn’t convert a C corporation that's already been actively operating to an S corporation without first consulting a tax practitioner because of some special tax considerations of going from C status to S status. 4. don’t waste time trying to fix a problem you don’t understand. you often can support a salary that allows you to save on taxes. Most of the time. you’ll also need to register your California corporation with the Montana Secretary of State’s office and get the appropriate business licenses from Montana state. It’s truly foolish to save yourself $500 of attorneys’ fees but end up paying an extra $5. But if you’re having trouble. county and city government agencies.S. the “75 day clock” means that the corporate return is due on March 15—not April 15 (which is when individual tax returns and partnership tax returns are due). may often use a non-calendar year for their accounting. Montana. Be aware that the IRS can challenge an unreasonably low salary paid to an S corporation shareholder-employee as well as an unreasonably high salary paid to a C corporation shareholder-employer. 2008 by Fast Easy Incorporation Kits web site .
2008 by Fast Easy Incorporation Kits web site .Appendix A Sample Corporate By-laws Copyright © 2007.
both within and without the state in which it is incorporated. present in person or represented by proxy. If. at which the shareholders will elect by a plurality vote of their shares the directors of the Company and transact such other business as may properly be brought before the meeting.4.1. of capital stock of the Company representing a majority of the votes of all capital stock of the Company entitled to vote thereat will constitute a quorum at such meeting for the transaction of business except as otherwise provided by the articles of incorporation or law. date and time of the meeting will be given to each shareholder entitled to vote thereat not less than ten nor more than 60 days before the date of the meeting. The Company may. such quorum will not be present or represented at any meeting of the shareholders. Annual Meetings. Notices. however. The presence at a shareholders meeting of the holders. have such other offices and places of business. 2. without notice other than announcement at the meeting. If said notice is for a shareholders meeting other than an annual meeting. Offices. for any purpose or purposes. on any weekday which is not a holiday and which is not more than 90 days after the end of the fiscal year of the Company. Shareholder Meetings. it will in addition state the purpose or purposes for which said meeting is called. 2008 by Fast Easy Incorporation Kits web site . present in person or represented by proxy. the shareholders entitled to vote thereat. until a quorum will be present or represented. 2. will have power to adjourn the meeting from time to time.2. Written notice of each shareholders meeting stating the place. Special meetings of the shareholders. in addition to its registered office in the state in which it is incorporated. Such request of the Board or shareholders will state the purpose or purposes of the proposed meeting. as the Board of Directors of the Company (the “Board”) may from time to time determine or as the business and affairs of the Company may require. 2. unless otherwise prescribed by the articles of incorporation or law. may be called by the president and will be called by the president or secretary at the request in writing of (a) a majority of the Board.3. At such reconvened meeting at which a quorum Copyright © 2007. 2. 2. or at such other time and date as will be determined from time to time by the Board and stated in the notice of the meeting.m.Bylaws of ______________________________________________ Formed under the laws of the state of _______________________ (the “Company”) 1. and the business transacted at such meeting will be limited to the matters so stated in said notice and any matters reasonably related thereto. Quorum. Special Meetings. Annual meetings of shareholders will be held at 10:00 a. or (b) shareholders owning capital stock of the Company representing not less than one tenth of the votes of all capital stock of the Company entitled to vote thereat.
If any such adjournment is for more than 30 days. in which case such express provision will govern and control the decision of such question. Any action required to be taken.5. and may be inspected by any shareholder who is present.1.3.5. Voting Lists.5. at the registered office of the Company.2. Number. unless the question is one upon which. of capital stock of the Company representing a majority of the votes of all capital stock of the Company entitled to vote thereat will decide any question brought before such meeting. for any purpose germane to the meeting. each shareholder will be entitled to one vote in person or by proxy at every shareholders meeting for each share of capital stock held by such shareholder. a complete list of the shareholders entitled to vote thereat arranged in alphabetical order and showing the address of and the number of shares registered in the name of each shareholder. 2. No proxy will be voted on after eleven months from its date. unless the proxy provides for a longer period.3. 2.5. Such list will be open to the examination of any shareholder.5. the articles of incorporation or law directed or required to be exercised or done by the shareholders. The officer who has charge of the stock ledger of the Company will prepare. setting forth the action so taken. Proxies. 2008 by Fast Easy Incorporation Kits web site . 3.5.4. Consents in Lieu of Meeting. 2. any business may be transacted which might have been transacted at the meeting as originally notified. during ordinary business hours for a period of at least ten days prior to the meeting. at any meeting of shareholders may be taken without a meeting. Copyright © 2007. a new notice of said meeting will be given to each shareholder entitled to vote at such meeting. by express provision of the articles of incorporation or law. the vote of the holders. Directors. or which may be taken. Purpose. without prior notice and without a vote. Election.5. Votes Per Share. if a consent in writing.1. The list will also be produced and kept at the time and place of the meeting during the whole time thereof.2. or if after the adjournment a new record date is fixed for the reconvened meeting.will be present or represented. 2. 3. Plurality. at least ten days before every meeting of shareholders. All directors will be elected by the shareholders at each annual shareholders meeting. 2. 2. Directors need not be shareholders or residents of the state in which the Company is incorporated. will be signed by all of the holders of outstanding stock entitled to vote thereon. The business of the Company will be managed by or under the direction of the Board. a different vote is required. Voting of Shares. which may exercise all such power of the Company and do all such lawful acts and things as are not by these bylaws. 3. When a quorum is present at any meeting. 3. present in person or represented by proxy. The number of directors constituting the Board will never be less than one and will be determined by resolution of the Board. Unless otherwise provided in the articles of incorporation.
5. any director or the entire Board may be removed. Unless otherwise restricted by these bylaws or the articles of incorporation. Unless otherwise restricted by these bylaws or the articles of incorporation. 4. Special Meetings. periodic meetings of the Board may be held without notice at such times as will from time to time be determined by resolution of the Board. Compensation. as the case may be. the Board will have the authority to fix the compensation of directors. Consent in Lieu of Meeting. 3. without notice other than announcement at the meeting. if any. Regularly scheduled. with or without cause. The president or secretary will call a special meeting of the Board on the written request of two (b) directors or the sole director. 4. Copyright © 2007. 4. 4. Meetings of the Board. though less than a quorum. No such payment will preclude any director from serving the Company in any other capacity and receiving compensation therefore. No notice to the directors will be necessary legally to convene this meeting. Members of committees of the Board may be allowed like compensation for attending committee meetings.6. A majority of the directors will constitute a quorum for the transaction of business at any meeting of the Board. 4. provided a quorum is present. Unless otherwise restricted by these bylaws or the articles of incorporation.4. Any director so elected by the Board will have a term terminating with the next election of one or more directors by the shareholders. any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting. by a majority vote of the shares entitled to vote at an election of directors. No more than two (b) newly-created directorships may be filled by the Board between any two (b) successive annual shareholders meetings. and the act of a majority of the directors present at any meeting at which there is a quorum will be the act of the Board. 3. and the writing or writings are filed with the minutes of proceedings of the Board or committee. The Board will meet as soon as practicable after the adjournment of each annual shareholders meeting. until a quorum is present. Annual Meeting. Vacancies. Special Meetings of the Board may be called by the president on one day’s notice to each director.4. Removal.2. If a quorum will not be present at any meeting. Plurality. 2008 by Fast Easy Incorporation Kits web site . except as may be otherwise expressly provided by the articles of incorporation or law. either personally or by mail or telegram. Quorum.3. Regular Meetings.5. as the case may be.3. the directors present thereat may adjourn the meeting from time to time. The directors may be reimbursed their expenses. A director elected to fill a vacancy will be elected for the unexpired term of his predecessor. if all members of the Board or committee. consent thereto in writing. of attendance at each meeting of the Board and may be paid either a fixed sum for attendance at each meeting of the Board or a stated salary as director. 4. Vacancies in the Board may be filled by a majority vote of the remaining directors.1.
the “Required Officers”) having the respective duties enumerated below and may elect such other officers having the titles and duties set forth below which are not reserved for the Required Officers or such other titles and duties as the Board may by resolution from time to time establish: 6. name or dissolve one or more committees. Chairman of the Board. the vice presidents in the order determined by the Board. unless the resolution establishing such committee.1.3. except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof will be expressly delegated by the Board to some other officer or agent of the Company. 6. The president will be the chief executive officer of the Company. amend the bylaws of the Company. The president will execute bonds.1. lease or exchange of all or substantially all of the Company’s property and assets other than in the ordinary course of business. Available Powers.1. will have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company. 6. or if there be no such determination. to the extent provided in the resolution of the Board establishing such committee and as limited by these bylaws. 5. fix the compensation of any member of such committee. the vice president (or in the event there be more than one vice president.1. cause the dissolution of the Company or a revocation of such a dissolution. Copyright © 2007.2. Elected Officers. The Board may by resolution establish.3. and may authorize the seal of the Company to be affixed to all papers which may require it. fill a vacancy in the Board or any committee thereof. Officers. The Board will elect a president and a secretary (collectively. In the absence of the president or in the event of his inability or refusal to act. Establishment. or. 6. 5. He will advise and counsel the president and other officers and will exercise such powers and perform such duties as will be assigned to or required of him from time to time by the Board. Each committee will keep regular minutes of its meetings and report the same to the Board when required. adopt a plan of merger or consolidation. In the absence of the chairman of the Board or in the event of his inability or refusal to act. each committee to consist of one or more of the directors.1. Unavailable Powers.1. will have general and active management authority over the business of the Company and will see that all orders and resolutions of the Board are carried into effect. these bylaws or the articles of incorporation expressly so provide. 6. President.2. Committees of Directors. The chairman of the Board will preside at all meetings of the shareholders and the Board. 2008 by Fast Easy Incorporation Kits web site . recommend to the shareholders the sale. the articles of incorporation and law. Vice Presidents. 5. amend or repeal any resolution of the Board which provides that it will not be so amendable or repealable. Any such committee. declare a dividend or authorize the issuance of stock. then in the order of their election) will perform the duties of the president. No committee of the Board will have the power or authority to amend the articles of incorporation. deeds of trust and other contracts requiring a seal under the seal of the Company.5. the president will preside at all meetings of the shareholders and the Board.
in the absence of the treasurer or in the event of his inability or refusal to act. perform the duties and exercise the powers of the treasurer and will perform such other duties and have such other powers as the Board or the president may from time to time prescribe.and when so acting. in the absence of the secretary or in the event of his inability or refusal to act. 6. The vice presidents will perform such other duties and have such other powers as the Board or the president may from time to time prescribe. The assistant secretary or. assistant treasurers and other assistant officers. then in the order of their election or appointment) will. 6. resignation. papers. may have a president.1. Assistant Secretaries. The treasurer will have custody of the corporate funds and securities. Secretary. Each division of the Company. will keep full and accurate accounts of receipts and disbursements in books belonging to the Company and will deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositaries as may be designated by the Board.8. The Board may give general authority to any other officer to affix the seal of the Company and to attest the affixing thereof by his signature. the assistant treasurers in the order determined by the Board (or if there be no such determination. treasurer or controller and one or more vice presidents. Divisional Officers. assistant secretaries. 2008 by Fast Easy Incorporation Kits web site . at its regular meetings. the assistant secretaries in the order determined by the Board (or if there be no such determination.5. retirement or removal from office of all books. report to and serve at the pleasure of the Board and such other officers that the Board Copyright © 2007. The secretary will attend all meetings of the shareholders. perform the duties and exercise the powers of the secretary and will perform such other duties and have such other powers as the Board or the president may from time to time prescribe. taking proper vouchers for such disbursements. if there be more than one. or when the Board so requires.7. 6.1. 6. vouchers. if any. secretary. He will have custody of the corporate seal of the Company and he will have authority to affix the same to any instrument requiring it.1. if there be more than one. he will give the Company a bond which may be renewed with such frequency and will be in such sum and with such surety or sureties as will be satisfactory to the Board for the faithful performance of the duties of his office and for the restoration to the Company in the case of his death. and will render to the president or to the Board.1. He will give. Treasurer. Any number of such offices may be held by the same person. it may be attested by his signature or by the signature of such assistant secretary. The assistant treasurer or. then in the order of their election or appointment) will. and when so affixed. 6.4. or cause to be given.6.1. Such divisional officers will be appointed by. Assistant Treasurers. notice of all meetings of the shareholders and special meetings of the Board and will perform such other duties as may be prescribed by the Board or the president. money and other property of whatever kind in his possession or under his control belonging to the Company. an account of all his transactions as treasurer and of the financial condition of the Company. will have all the powers of and be subject to all the restrictions upon the president. If required by the Board. the Board and (as required) committees of the Board and will record all the proceedings of such meetings in books to be kept for that purpose. He will disburse the funds of the Company as may be ordered by the Board.
7. where so authorized. unless the Board will by resolution provide that such class or series of stock will be uncertificated. The setting of salaries of appointed officers and the filling of vacancies in appointed offices may be delegated by the Board to the same extent as permitted by these bylaws for the initial filling of such offices. provided that the Required Officers and any other officer. participating. and (b) the Company will furnish a copy of such statement without charge to each shareholder upon request therefore.5. The officers of each division will have such authority with respect to the business and affairs of that division as may be granted from time to time by the Board and in the regular course of business of such division may sign contracts and other documents in the name of the division. possessing authority over or responsibility for any functions of the Board will be elected officers. to the extent allowed by law. Vacancies. 6. preferences and relative. The salaries of elected officers will be set by the Board. Multiple. and the titles and duties of such appointed officers may be as described in Section 6. Every holder of the capital stock of the Company. unless and to the extent the Board by resolution provides that any or all classes or series of a class of stock will be uncertificated. Salaries. 6. assistant officers and agents and may also remove such officers. designations. 6. routinely possessing authority over or responsibility for any functions of the Board must be directors. retirement. prepared in accordance with applicable law.1 for elected officers. Election.2. Copyright © 2007. Entitlement to Certificates. Officers need not be shareholders or residents of the state in which the Company is incorporated.4. Appointed Officers.2. limitations or restrictions of such preferences and/or rights will.may place in authority over them. The Board will also fill any vacancy in an elected office. If the Company will be authorized to issue more than one class of capital stock or more than one series of any class. 7. a statement of the powers. Shareholder and Director Officeholders. unless these bylaws or the articles of incorporation otherwise provide. provided that. 2008 by Fast Easy Incorporation Kits web site . All elected officers will be elected at each annual meeting of the Board and will serve until their successors are duly elected and qualified or until their earlier death. Multiple Classes of Stock. as it will from time to time deem necessary. such as the chairman of the Board. disqualification. Any number of offices may be held by the same person. 6. assistant officers and agents or delegate the power to do the same. such as the chairman of the Board. will be entitled to have a certificate. Officers. the face or back of such certificate may state that (a) such a statement is set forth in the articles of incorporation as filed with the secretary of state of the state in which the Company is incorporated. be set forth in full on the face or back of such certificate which the Company will issue to represent such class or series of stock. The Board may also appoint or delegate the power to appoint such other officers.3. Share Certificates. certifying the number of shares owned by him. in lieu of such statement.1. 7. resignation or removal from office. optional or other special rights of each class of stock or series thereof and the qualifications.
be valid for any reconvenings and readjournments of said meeting made no later than 90 days after said record date. vote and be held liable for calls and assessments and will not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any person other than such registered owner. stolen or destroyed certificate or certificates. the president or any vice president.3. Registered Shareholders. When authorizing such issue of a new certificate or certificates. to express consent to corporate action in writing without a meeting. In order that the Company may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof. an assistant treasurer. in its discretion and as a condition precedent to the issuance thereof. the signatures of the officers of the Company may be facsimiles. a record date. to receive payment of any dividend or other distribution or allotment of any rights. 7. Upon surrender to the Company or to its transfer agent. of a certificate for shares duly endorsed or accompanied by proper evidence of succession. and (b) the treasurer. 7. whether or not it will have express or other notice thereof. The Company will be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends. or his legal representative. the Board may. which will not be more than 60 nor less than ten days prior to any such action. assignation or authority to transfer said shares and of the payment of all taxes applicable to the transfer of said shares. the Company will be obligated to issue a new certificate to the person entitled thereto.7.5. the certificate may be issued by the Company with the same effect as if such officer held such office on the date of issue. Copyright © 2007. Lost Certificates. 2008 by Fast Easy Incorporation Kits web site . at the Board’s election. in advance. In case any officer who has signed or whose facsimile signature has been placed upon a certificate will have ceased to hold such office before such certificate is issued. conversion or exchange of stock or to effect any other lawful action. Fixing Record Date.7.6. or (b) a registrar other than the Company or any employee thereof. 7.4. except as otherwise required by law. Where a certificate is countersigned by either (a) a transfer agent other than the Company or any employee thereof. the Board may fix. stolen or destroyed certificate or certificates. or the legal representative thereof. A record date validly fixed for any meeting of shareholders will be valid for any adjournment of said meeting and will. Signatures. Transfer of Stock. stolen or destroyed certificate or certificates. cancel the old certificate and record the transaction upon its books. if any. 7. Each certificate representing capital stock of the Company will be signed by or in the name of the Company by (a) the chairman of the Board. stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost. require the owner of such lost. The Board may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Company alleged to have been lost. to exercise any rights in respect of any change. to advertise the same in such manner as it will require and/or to give the Company a bond in such sum as it may direct and with such surety or sureties as are acceptable to it as indemnity against any claim that may be made against the Company with respect to the allegedly lost. the secretary or an assistant secretary of the Company.
Reserves. Dividends. 2008 by Fast Easy Incorporation Kits web site . Whenever any notice is required to be given under law. paid in cash.7.6. any committee thereof or the shareholders may hold a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can effectively communicate with each other. The Board will present at each annual meeting of shareholders. If no such place is so designated. (2) on the earlier of (i) the fourth day after deposit. All shareholders and directors meetings will be held at such place or places. Copyright © 2007.3. 8. said meetings will be held at the registered office of the Company. 8. 8. the articles of incorporation or these bylaws. the articles of incorporation or law. the articles of incorporation or law applicable to the Company. and such participation in a meeting so held will constitute presence in person at the meeting. Any such notice will be given at the address of the receiving party of which the sending party has last received actual or constructive notice. there may be set aside out of any funds of the Company available for dividends such sum or sums as the Board from time to time. for equalizing dividends.1. but such notice may be given by (a) personal delivery. 8. it will not be construed to mean personal notice. for repairing or maintaining any property of the Company or for such other purposes as the Board will determine to be in the best interest of the Company. (c) deposit with a recognized courier company. return receipt requested. Attendance Via Communications Equipment. 8. Any such notice will be deemed to be received (1) when delivered. under these bylaws. or (3) when received. Reports to Shareholders. if given pursuant to clause (a) of the previous sentence.5. Before payment of any dividend. property or shares of capital stock and as may be limited by these bylaws. as will be designated from time to time by the Board and stated in the notices thereof.8. and the Board may modify or abolish any such reserve in the manner in which it was created. 8.2. a written waiver of such notice. Whenever. or (d) facsimile. may be declared by the Board at any meeting thereof. cable. or (ii) the time verification is made of delivery. Miscellaneous. if given pursuant to clauses (b) or (c) of the previous sentence. within or without the state in which the Company is incorporated. Dividends on the capital stock of the Company. notice is required to be given to any person. and at any special meeting of shareholders when called for by vote of the shareholders. the articles of incorporation or law. in its absolute discretion. prepaid. determines proper as a reserve or reserves to meet contingencies. Unless otherwise restricted by these bylaws. telex or telegram transmission. Waiver of Notice. members of the Board. prepaid. if given pursuant to clause (d) of the previous sentence. signed before or after the date of such waiver by the person or persons entitled to said notice. Means of Giving Notice. Place of Meetings. 8. a full and clear statement of the business and condition of the Company. return receipt requested. (b) deposit in the United States mail. will be deemed equivalent to such required notice.4.
repealed or replaced by the Board and by the shareholders. Fiscal Year. Amendments. These bylaws may be adopted. 2008 by Fast Easy Incorporation Kits web site . affixed or otherwise reproduced. Checks. amended. 8. alteration. 8. 8. altered. All checks or demands for money and notes of the Company will be signed by such officer or officers or such other persons as the Board may from time to time designate. unless and to the extent the power of either is limited by the articles of incorporation.8. amendment. or at any special meeting of the shareholders or of the Board if notice of such adoption.11. repeal or replacement is contained in the notice of such special meeting. The seal may be used by causing it or a facsimile thereof to be impressed. The seal of the Company will be in such form as may from time to time be adopted by the Board. Seal.9. at any annual shareholders meeting or annual or regular meeting of the Board.10. END Copyright © 2007. The fiscal year of the Company will be fixed by resolution of the Board.8.
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