This action might not be possible to undo. Are you sure you want to continue?
Do-It-Yourself Incorporation Kit: Iowa 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.
Copyright © 2007, 2008 by Fast Easy Incorporation Kit web site
In this document, I describe how you can, on your own and without the help of an accountant or attorney, set up an Iowa corporation. Specifically, I provide step-by-step instructions for completing several legal and tax documents related to forming a Iowa corporation, including filing the articles of incorporation with the Iowa 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 Iowa 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 Iowa Corporation
Corporations deliver two huge benefits to Iowa 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.
Copyright © 2007, 2008 by Fast Easy Incorporation Kit web site
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.
Copyright © 2007, 2008 by Fast Easy Incorporation Kit web site
a modest amount of life insurance. drops a hammer on the customer’s head? The corporation may offer you some protection in this case. 2008 by Fast Easy Incorporation Kit web site . the corporation can provide benefits such as medical insurance. And here’s another example. Here’s what all this means.you from that sort of tort liability. business owners may intentionally or unintentionally do things that remove or weaken the legal liability protection that a corporation provides. What happens if someone working for you. regularly get an attorney involved in your business or investment planning. in effect. and so on. A business owner might give a personal guarantee to a bank or vendor that says. 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. for example. small business corporations provide two tax benefits to their owners. “I guarantee that my corporation will satisfy all of its obligations to you and if it doesn’t. An attorney knowledgeable in Iowa business law can help you increase the liability protection that you gain from using as corporation for your business or investing.” Or a business owner might. which makes things murkier. I will personally pick up the tab. 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 C corporation (but not an S corporation which I discuss next) can typically provide tax-free fringe benefits to all of its employees. 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. the customer can probably look not only to your corporation for payment of damages related to the dropped hammer but also to you personally. The first potential tax saving associated with incorporating your business applies to what the tax laws call a C corporation. The customer might reasonably argue that you should have done a better job managing the employee or subcontractor. If you’re extremely concerned about the asset protection features of setting up and operating a corporation. 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. Finally. And this consultation doesn’t need to be particularly expensive. As a general rule. employee housing (in some cases). In other words. one of your employees or subcontractors. But you may still be personally responsible as the manager of the person dropping the hammer. In other words. And this is true even if the only employee is a shareholder. reimbursement of medical expenses.
the corporation might be providing $20. To understand this benefit.000 of business profit. suppose a sole proprietor. the business owner pays roughly $18. And this would mean that the annual tax savings would very likely run between $5. note that these employment taxes are in addition to the income taxes he or she pays on the $200. In a nutshell.000 and $10.000 of business profit. and he or she will pay roughly $3. If the single shareholder-employee extracts all of the $200. Caution: If you want to explore or exploit the tax-free fringe benefits angle in more detail. while tax deductions for the corporation. though.000 of business profit and $3.000 each year. or a single shareholder in a regular corporation (called a C corporation by tax laws) makes $200.000 or $40. In the case of a shareholder-employee in a corporation. This proprietor or partner will pay roughly $15. each business owner also pays an employment tax equal to roughly 15% on the first $100. Subchapter S status.) Copyright © 2007. Note: In the case of a sole proprietorship or partners in a partnership. 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. 2008 by Fast Easy Incorporation Kit web site . Tax-free fringe benefits.000 or $30.000 in tax on the first $100. A corporation also affords its owners a second potential tax saving opportunity. Again.000 of employment taxes. a partner in a partnership. In a situation where a one-employee-one-shareholder corporation provides full health benefits and housing to its single shareholder-employee.000 of profit. In all three of these cases.000 on the second $100. 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. In addition to income tax.000 of profit and then roughly 3% on any profit above $100.000 on the second $100.000 a year in tax-free fringe benefits to that employee. and I’m being a little rough here.000 in tax on the first $100.000 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. (Those income taxes probably total another $30. would not be taxable to the employee.deductions by tax laws.000 of profit. money that a business owner makes in an active trade or business is not subject just to income taxes.000 in a year.000. Yet those benefits. then. allow a small corporation’s owners to enjoy some of their business profits tax free. But—and here’s the neat thing—the deductions aren’t taxed to employees. the employment taxes are called Social Security and Medicare taxes. To show you how the employment taxes work.000. the employment taxes are called self-employment taxes.
a partnership or a C corporation. bump the prices they charge you. or $9. an S corporation saves the shareholder-employee roughly $9. The accountant and insurance company may. In this case. For starters. So an obvious question is “Why wouldn’t everyone become a corporation?” Perhaps predictably. the bank account for a corporation probably won’t be free. Related to this point. a corporation will probably increase your banking.000 in wages. or S. similarly. 2008 by Fast Easy Incorporation Kit web site .000.000 annually.000 annually. a corporation increases the complexity and workload of administering your business. 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. While a sole proprietorship or informal real estate partnership may be able to keep its bookkeeping and income tax return preparation very simple. making an owner a corporate employee results in a new. The bank may charge $10. the employment tax equals 15% of only the $60. there are costs and headaches associated with incorporating. accounting and insurance costs. $20. a corporation needs to file its own tax return. This tax equals as much as 6. or $434 per employee. Perhaps this means wages equal to $60.Things work differently if the corporation elects to be treated as a Subchapter S. This increase in administrative complexity adds to your costs and your work.2% of the first $7. Increased Administrative Complexity… As a general rule. As compared to the case where the same business makes $200. Copyright © 2007.000 a year but is operated as a sole proprietorship. 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. while the bank account for a sole proprietorship or informal partnership may be free if you keep a large-enough balance. or even more each month. extra payroll tax (the Federal Unemployment Tax). corporation.000 an employer pays individual employees in wages. And this tax return may cost anywhere from a few hundred dollars to a few thousand dollars annually. the corporation probably sets the shareholder-employee’s wages to a low but reasonable level. For example.
Finally. you may spend money on publications like this. Obviously. the control requirement is met when a proprietor incorporates his or her business. again. And the control requirement is met when a partnership incorporates a partnership. For example. Fortunately. 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. You’ll also need to keep good minutes of these meetings. no tax effect should occur merely because the partnership has become a corporation. 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. And exchanges represent taxable events unless tax laws say otherwise. 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. You will need to print new letterhead. You may buy the services of accountants and attorneys. You may need to consult a tax practitioner. no tax effect should occur merely because the proprietorship has become a corporation. in any situation that isn’t like one of the preceding examples. In other cases. if a sole proprietor incorporates his or her business. 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.A corporation may involve several hundred or even a few thousand dollars of startup expense. 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 will mean that you need to have a board of directors (which will need to meet regularly such as monthly. quarterly or annually) and annual stockholders meetings. 2008 by Fast Easy Incorporation Kit web site . For example. however. Obviously. business cards. Similarly. A Slightly Different Set of Tax Rules… I also want to briefly summarize here the rules about how corporations are taxed. such as where you’ve got a larger group of people who are Copyright © 2007. if a partnership incorporates its business. tax laws do “say otherwise” in the typical cases of a sole proprietor or partnership incorporating the business.
At the time I’m writing this. the transferred liabilities ($10. For this reason. Let me also make one other point about incorporating a business.000 – taxed at 39% $335. How C Corporations Get Taxed Regular corporations. 2008 by Fast Easy Incorporation Kit web site . a corporation counts income and deductions the same way that a sole proprietorship or partnership does. called C corporations. that transfer of liabilities may trigger taxes.000 – taxed at 34% $100. many small corporations attempt to extract all of the business profits in the form of salary. The mechanics of how this works are beyond the scope of this short discussion. 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.000.001 to $335.000 – taxed at 25% $75. Case #2: If a person offloads more debt into the corporation than the depreciated basis of the property contributed to the corporation. and the person contributing the property and transferring the liabilities will probably be taxed on the liabilities contributed. If a sole proprietor or partnership incorporates a business and. as part of incorporating a business. Specifically. The person contributing the truck gets taxed on the $10. as part of the incorporation.contributing property to the corporation in stages. In this case.001 to $75. transfers liabilities to the corporation. But the effect is pretty easy to describe: The exchange in this case looks to the tax man like a sale. Anytime the corporation earns or receives income. transferring liabilities as part of incorporation triggers taxes in two cases: Case #1: If. meeting the “control after incorporation” requirement may not be quite so easy. Corporation Income and Corporation Deductions As a generalization. Anytime the corporation incurs or pays some expense that is ordinary and necessary for its business. the business can count that deduction in its accounting records. For example.001 to $10.000) exceed the basis of the property contributed ($0). the excess of the liabilities over the basis of the property gets counted as income or gain.001 to $100. 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. get taxed on their income. for example.000 – taxed at 15% $50. the business needs to count that income in its accounting records.000 – taxed at 34% Copyright © 2007. corporate income is taxed for federal tax purposes according to the following tax rate schedule: $0 to $50.000.000.
000. 2008 by Fast Easy Incorporation Kit web site . based on the states in which the corporation owns property. 10% on income between $100. does business in other states that tax corporate profits.000.000.750 in federal corporate income taxes on the first $100. then another $50.000.000.000 of income. if the corporation’s payroll is evenly split between Nevada.333 – taxed at 35% A corporation that makes $100.333 – taxed at 38% Over $18. $25. The three-factor apportionment formula apportions one-third of the $300.000 of profit. $50. the business still owes those states income tax on its profits.000 and $250.$10.000 and $100. the apportionment formula apportions one third of the profit—the final $100. Note.000 of profit is apportioned to Iowa and $50. The apportionment formula apportions one third of the profit—another $100. For example.000. In this case.333. for example.000. or $100. Corporate dividends paid by a C corporation. those shareholders pay tax on the dividend. Suppose. and 12% on income in excess of $250. California. at the time of this writing. for example.000 – taxed at 35% $15.000. for example. Finally.000—based on the payroll paid in the states where the business employs people.000. that a Iowa business.000 of profit is apportioned to California. pays a 15% federal tax on the first $50.000 of profit is apportioned to each of these four states. of the profit. If the corporation makes half of its sales in Iowa and half in Washington.333. the state of Iowa levies a state corporate tax equal to 6% on the first $25. Here’s a simple example of how this works. For example.000.001 to $15. If you work out the math. which is also a Iowa corporation. if the corporation has half of its property in Iowa and half of its property in California. that if the corporation pays a dividend to its shareholders out of its profits. the corporation apportions its profit—usually using something called a three-factor formula. Suppose a corporation (and it doesn’t matter whether the corporation is a C corporation or an S corporation) makes $300. generally get taxed at a 15% federal rate.000. Copyright © 2007. and a 34% federal tax on the last $25. the corporation pays $22. 8% on income between $25. too. If a corporation operates in multiple states.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). In addition. Iowa and Oregon.000—based on the states in which the corporation sells its products or services.000 of profit is apportioned to Iowa and $50.000. for example. a 25% federal tax on the next $25.001 to $18.000 of profit is apportioned to Washington.
the shareholders pay regular dividend tax rates (usually 15%) on the money. You’ll need to carefully consider the benefits and costs as they add up in your specific situation. For example. 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. a corporation distributes property rather than cash. 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. But business owners need to understand that if a corporation owns property. if the corporation distributes appreciated property (like real estate) to a shareholder. the incorporation option is uneconomical for very small businesses. a limited liability company is a “lite” version of a corporation. For example. and then distributing all of the cash that’s still left over to the shareholders. or LLC. In essence. the corporation pays tax on the appreciation. Stopping a Corporation If a corporation stops doing business. One final note: If. In these cases. I can’t give you a one-size-fits-all answer. After the previously taxed profits are exhausted and to the extent of any capital contributed to the corporation. To the extent that distributions made to shareholders come from previously taxed profits. as part of stopping business. On the other hand. the corporation generally owes taxes to that state—either income taxes (which most states charge) or gross receipts taxes. employs people. think that the limited liability company is often a better choice for small businesses than a corporation. the corporation 2 Most business advisors. A limited liability company. 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 a limited liability company2. paying off all of the corporation’s debts. an additional Copyright © 2007. me included. the shareholders get tax-free returns of capital. 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%). gives you all the same liability protection. 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.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. however. or makes sales in a state. In my opinion. 2008 by Fast Easy Incorporation Kit web site . the shareholders need to liquidate the corporation by selling all of the corporation’s assets. I will share these thoughts.
". or the abbreviation "corp. The number of shares the corporation is authorized to issue and a par value for authorized shares or classes of shares.state. "incorporated". (See Figure 1) 3. Here’s what you do: 1. Forming the Iowa Corporation The actual steps you take to form an Iowa state corporation are almost comically simple. "inc. presumably you’ve already read this sort of comment from me before. For example. The name and address of each incorporator. Copyright © 2007. (I used the example name. all of the following names should be acceptable: tax benefit (flexibility). (Optional) Check if the corporation name you want is available. “Acme Explosives Corporation.asp Although not necessary. As an added bonus. "co. you may want to check if the corporation name you want to use is even available. Identify the name you want to use for your new corporation. an S corporation can often save the owners thousands of dollars a year in income or payroll taxes.”) A corporation name must contain the word "corporation".us/search/corp/corp_search.". As a first step. or "limited". Create a form that has the following: • • • • • • A corporate name for the corporation The street address of the corporation’s initials registered office and the name of its initial registered agent at that office. or words or abbreviations of like import in another language.". Enter your business or investment name onto the lines provided. This would be important if you do not plan to get your forms in immediately.". you can reserve a name for $10. The names and addresses of the individuals who are to serve as the initial directors. so I won’t bang the LLC drum again. Or alternatively. 2. "company".sos. The purpose or purposes for which the corporation is organized.economically reduces business risk. 2008 by Fast Easy Incorporation Kit web site . Here’s an easy and free way to do this: You can search for a similarly named corporation using the Iowa Secretary of State’s online database at: http://www. a C corporation can often produce tax savings to the business owner because shareholder-employers can get taxfree fringe benefits. but burdens you with less red tape. That said.ia. or "ltd.
A class of shares is a group of shares having the same general characteristics. Acme Explosives Corporation will issue 1000 shares of common stock at a par value of $10. In this example. 7. domestic limited liability company. Name the board of directors Copyright © 2007. 4. Indicate the number of shares your corporation will offer. Acme Explosives Corporation Acme Explosives Corp. List the Incorporators An incorporator is someone who performs the act of incorporation and who signs the articles of incorporation and delivers them for filing. a domestic corporation. Shares without par value may be issued or sold at any price. 6. or a foreign corporation. Typically. Every business corporation must designate in its certificate of incorporation the number of shares which the corporation shall have the authority to issue and must state whether the shares are with par value or without par value. you are an incorporator. or notfor-profit foreign corporation authorized to transact business in this state whose business office is identical with the registered office. Therefore. “Preferred’’ shares are those that are entitled to priority in payment of dividends. Provide your name and address here. Acme Explosives Company Acme Explosives Co.Acme Explosives Incorporated Acme Explosives Inc. 2008 by Fast Easy Incorporation Kit web site . “Common’’ shares are shares that have no preference over any other shares with respect to the payment of dividends. Provide your name and address as the registered agent. In this case. or not-for-profit domestic corporation whose business office is identical with the registered office. you will need to put your name and address as well as your signature on the form. foreign limited liability company. classes are termed “common’’ or “preferred’’ or are given a special designation. 5. A registered agent is an individual who is a resident of Iowa and whose business office is identical with the registered office. Acme Explosives Ltd. Acme Explosives Limited. Shares represent ownership interest in the corporation. Shares with a stated par value cannot be issued or sold at a price less than the stated par value.
2008 by Fast Easy Incorporation Kit web site . Directors or trustees must be at least 18 year of age. Copyright © 2007. In the example. Business Activity Info You need to tell the Secretary of State what your corporation will do. 8.State the names and addresses of the first governing board. I put wholesaling to mining companies. A corporation may be formed for any purpose or combination of purposes for which individuals lawfully may associate themselves.
Figure 1: Iowa Articles of Incorporation document Copyright © 2007. 2008 by Fast Easy Incorporation Kit web site .
As a generalization. you can use uncertificated stock. You need to hold a stockholders meeting to elect a board of directors in accordance with your corporate by-laws. the board elects officers to the roles of president. your bank will probably also require the board of directors to approve setting up a bank account. but in general. uncertificated stock— in other words. however. it takes several weeks to get your corporation certificate back from the Secretary of State’s office. 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. stock for which you don’t issue stock certificates—is probably easiest. 12th St. Submit the corporation application After you complete the Articles of Incorporation document mail the document and a check for $50 to: Secretary of State First Floor. among other items. if you’re incorporating principally to Copyright © 2007. treasurer. 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. your corporation legally exists—you still need to perform three other startup tasks: 1. At this initial board meeting. IA 50319 Processing lead times vary. On the other hand. Tip: If you want to use stock certificates.9. Des Moines. 2. Your board of directors needs to hold a board of directors meeting in which. You need to follow your corporate by-laws as to how this process works. Lucas Building 321 E. Issuing Stock. secretary and so on. vice president. 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. And especially in the case where you are setting up a one-shareholder corporation which you will own and operate. You need to issue stock to the shareholders contributing cash or property. Electing Directors and Officers After the secretary of state certifies your corporation—and at this point. The sample corporate by-laws do allow you to use uncertificated stock. 3. 2008 by Fast Easy Incorporation Kit web site .
you’ll want to identify and then acquire the necessary permits and licenses. Until your EIN is added to the permanent records. The online EIN application is not available 24 hours a day. many cities also have business permit and license requirements.m. In addition. or pass an IRS Taxpayer Identification Number matching program. online EIN application. Eastern time Sunday 7:00 p.m. and according to your corporate by-laws. Iowa requires a license of many businesses that operate in the state. Getting an EIN for Your New Corporation You will need to get an Employer Identification Number. Eastern time Copyright © 2007.m. Eastern time Saturday 6:00 a. you can't file an electronic return. to 12:30 a.m.iowalifechanging.html 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. for your new corporation. if you do need an EIN. The Iowa Department of Economic Development provides a web site that gives information about many (if not most) business licensing requirements: http://www.minimize your legal liability. At the time I'm writing this (spring of 2008). 2008 by Fast Easy Incorporation Kit web site . or EIN. you want to do all this exactly right. make an electronic payment. and file any tax returns required for your corporation such as income tax returns and payroll tax returns.com/business/blic. identifies your business entity and often allows you to do things like open a bank account. to 9:00 p. Licensing a Business in Iowa As you probably know if you’ve worked or run a business in Iowa.Friday 6:00 a. to 12:00 a.m. apply for business licenses. An EIN. If you’ve set up an corporation for a business.m. also known as a Federal Tax Identification Number. Caution: The IRS takes up to two weeks to make your new EIN part of its permanent records. the IRS makes its online EIN application available according to this schedule: Monday . 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. Accordingly.
irs. also known as a C corporation. State why you are requesting an EIN. When prompted by the online EIN application. you do not need special software to complete the online EIN application.www4. you can click on it to see a definition in a new window. If a word or phrase appears blue and underlined.gov/modiein/individual/index. the online EIN application brings you to a page that explains your choice. If your new corporation will be treated for tax purposes as a regular corporation. explain why you are requesting an EIN. you also do not need special computer skills to complete the online EIN application. Identify the legal and tax structures of your business entity. click the "Corporations" button. click the "Corporations" button. The online EIN application asks questions and you simply provide the answers by filling in the blanks and checking boxes and buttons. 2. Note: The IRS web site supplies definitions for most of the terms used in the online EIN application.Fortunately. This step is very important because each type of legal and tax structure has different rules and regulations. 2008 by Fast Easy Incorporation Kit web site . When the online EIN application says "You have chosen Corporations" and asks what type of corporation. Go to the IRS online EIN application web page to begin the EIN online application: https://sa2. When the online EIN application says "You have chosen Corporations" and asks what type of corporation. What's more. After you indicate what type of legal and tax structure you've chosen for the new entity. Your choices are: Copyright © 2007. click the "S Corporation" button. 3. Go to the bottom of this page and click the “Continue” button. Go to the IRS website. If your new corporation will be treated for tax purposes as an S corporation. as well as tax reporting requirements. All you need to have is Internet access and a current Internet browser. Here are the precise steps for completing the online EIN application: 1. Clicking on these definitions will not halt the progress of your application.jsp Scroll to the bottom of the page and click the “Begin Application” button. click the "Corporations" button.
do not place a period after that initial. In a small corporation. 5. You will also be required to provide a phone number. you will click the “Started a New Business” button. owner or general partner. Note: If the contact person is a nonresident alien and therefore doesn't have a Social Security Number. the person may be able to first obtain an Individual Tax Identification Number by completing a Form W-7. 4. for example. please make sure you provide the most essential address Copyright © 2007. Don't use any punctuation other than a hyphen (-) and ampersand (&) in the name. Application for IRS Individual Taxpayer Identification Number form. If the IRS sends a letter to the corporation. If you do. You need to provide a physical address of your corporation. The IRS also wants information about the principal officer. you should identify a corporation officer (probably the president or treasurer) as the person the IRS should contact when it has questions. 2008 by Fast Easy Incorporation Kit web site . This address must be a U. address and may not be a PO box. Click the “Continue” button. You need to designate a contact person--or what the online EIN application calls a principal officer. For instance. you will be taken to a page to provide that address.§ § § § § Started a New Business Hired Employees Banking Purposes Changed Type of Organization Purchased Active Business In general. Note: IRS systems only allow 35 characters on the street address line. 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. including name and Social Security or Individual Tax Identification Number. Identify and describe a contact person of the corporation. If your address does not fit in 35 characters. Click “Continue” after you identify the type of primary member or principal officer. The IRS considers the contact person to be the individual or business responsible for tax matters. they send the letter to the corporation in care of the person.S. Provide the corporation's business location. if you use a middle initial. Do not use any punctuation except for a hyphen or a back slash.
Use the pull-down menu to select a month and year. Corp. tobacco and firearms. When prompted by the online EIN application. Copyright © 2007. the online EIN application allows only two special punctuation characters: hyphen (-) and ampersand (&). the online EIN application asks a series of questions about vehicles. suite numbers. Provide legal and trade name information about your corporation. etc). or Inc. the trade name (if any). Indicate whether the corporation is subject to special federal excise taxes. After you provide the corporation name. Again. However. the county and state where the corporation is located. If you use a trade name.. You can also provide a trade name. apartment numbers. quarterly federal excise tax returns. you will need to provide the corporation's start date. Click the “Continue” button. gambling. The name you provide as the legal name of your corporation should match the articles of organization or articles of incorporation. PLLC.information (i. 6. the answer will be “No” to all four questions.e. again when prompted. LC. identify the state where the articles of organization or articles of incorporation were filed. Finally. Click the “Continue” button. 7. the name may not contain an ending such as LLC. The online EIN application automatically fills in the county and state based on the physical address previously entered. address and start date information. if necessary. you should verify that both of these bits of information are correct. you need to provide the name of the corporation. This is the date on which the entity began doing business or will begin doing business. 2008 by Fast Easy Incorporation Kit web site . A trade name or "doing business as" name is another name under which the business or individual operates. 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. For most people. This is typically the same state as the corporation's physical address. and the corporation start date. When prompted. however. if any. Read the questions and answer them. and alcohol. the state where the articles of organization or formation are filed.
click the “Submit” button to receive your EIN. State How You Would Like to Receive Your EIN Confirmation Letter. you will be able to view the letter immediately and it will not be mailed to you. If you forget your EIN number. If you choose “Other” you will be taken to a second page of options. click on "Other" and then click the “Continue” button. after you determine the information is correct. 9. State what your corporation does. Print the summary page and check the information for errors. Tell the assistor you received an EIN from the Internet but can't remember it. If none of these options fit. If you choose to receive it online. Copyright © 2007. If none of the categories fit. Verify Your Information. the IRS will send it to the mailing address you provided. If you aren’t sure what a category includes.html.Click the “Continue” button. that you will need to have the Adobe Reader program installed on your computer. start a new application. Then. If any of the information is incorrect. 8. Then click the “Continue” button. click on the “Other” button on this page and then type in what your corporation will do. This may take up to four weeks. 10. though. Note: The unique prefixes 20 and 26 identify the EIN as a number issued via the Internet. This process can take up to two minutes. call (800) 829-4933 and select EIN from the list of options in order to speak with an IRS employee. The last page of the online EIN application summarizes your information.adobe. Note. choose a category that best describes your business. When prompted. 2008 by Fast Easy Incorporation Kit web site . Click the “Continue” button. You can receive your EIN confirmation letter online or by mail.com/products/acrobat/readstep2. This program can be downloaded for free from: http://www. you can click on that category for a further explanation. If you choose to receive the letter by mail.
pdf The web address for the SS-4 form instructions is: http://www. (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. Before calling for an EIN.irs. . the web address for the SS-4 form is: http://www. At the time I'm writing this document. Louisiana. also known as an S corporation. (1) all shareholders (and shareholder spouses residing in community property states like Arizona. you really should retrieve a copy of the SS-4 form and form instructions from the www. "Application for an Employer Identification Number.irs. In order to become an S corporation. Monday through Friday. a corporation must meet certain eligibility requirements. the easiest way to get an EIN number is through the interview-style. Nevada. For example. you can download a paper copy of the Form SS-4. However.gov web site and fill out the form as best you can before calling the number just given. and (4) shareholders must generally be Copyright © 2007. S corporations often save the small business owner significant amounts of federal corporation income tax and payroll taxes. and then mail or fax the completed SS-4 to the appropriate address or fax number.m. New Mexico. Idaho.10:00 p. called a C corporation. California." from www. complete it. Electing S Corporation Treatment for a Corporation A corporation may elect to be treated as a Subchapter S corporation.pdf Applying for a New EIN by Telephone You can also obtain an EIN immediately by calling (800) 829-4933.gov. As compared to a regular corporation.m. online EIN application described in the preceding paragraphs. local time. Washington and Wisconsin) must consent to the S election.gov/pub/irs-pdf/fss4. however. In a nutshell.Applying for a New EIN using the Paper SS-4 Form As mentioned. (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). The hours of operation are 7:00 a. Texas.gov/pub/irs-pdf/iss4.irs.irs. the IRS also provides other procedures for obtaining an EIN. 2008 by Fast Easy Incorporation Kit web site .
Enough said.either U.4 However. At the time I'm writing this. and certain trusts and charities. and (sometimes) substantial payroll tax savings. 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.com and from the http://www. If you want an S election to be effective as of January 1. estates of U.htm.irs. including pass-through of net operating losses. 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). Get the IRS 2553 form from the www. the precise web address for the 2553 form is: http://www. Download the election forms. 2008 by Fast Easy Incorporation Kit web site . The precise web address for the 2553 instructions at the time I'm writing this is: http://www.irs. citizens or permanent residents. you file Form 2553 with the Internal Revenue Service within 75 days from the start of the year.fasteasyincorporationkits. citizens or permanent residents. follow these steps: 1.irs.gov/pub/irs-pdf/f2553. You will want to contact them or a knowledgeable local tax practitioner for current information about any “late Subchapter S election procedures” procedure. many tax traps exist for the unwary and the careless. you need to file the election by March 15. no federal corporate income tax. you need to file the election by August 15. to also grab an up-to-date copy of the form instructions. in other words.S. To make the election to be treated as an S corporation.3 Caution: I want to caution you one last time about making the S election: Before you elect. Copyright © 2007.gov web site.pdf 3 The IRS may allow you to make a late S election. if you're going to grab an up-to-date copy of the form. 4 You can get basic tax information on S corporations by visiting www.pdf It's also not a bad idea.SCorporationsExplained. To complete and file the IRS Form 2553. S corporations offer their owners and shareholder-employees some wonderful tax planning opportunities.com/taxationofcorporations.S.gov/pub/irs-pdf/i2553.
Figure 2: Page 1 of an example completed 2553 Form. 2008 by Fast Easy Incorporation Kit web site . Copyright © 2007.
Specify that the S corporation’s tax year will end on December 31. address. This tells the IRS who to call if they have questions about the S election. Note: If you think you want a non-calendar fiscal year end. 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. or November. Provide the corporation’s name. However. or on the last day of September. October. 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. 2008 by Fast Easy Incorporation Kit web site . make an S election effective as of the start of the year (typically January 1). Having a non-calendar fiscal year—an accounting year that ends in September. however. Note. Enter the effective date of your S election into Box E. Instead. Accordingly. and EIN information. in the block labeled “Type Or Print. October or November—only complicates your tax accounting and produces no real benefit for you.” you enter the name of the corporation. you shouldn’t make the S election yourself. Note: In the area beneath box H. 4. Tip: You can elect Subchapter S status for a corporation that’s previously operated as a regular C corporation. 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. S corporation fiscal years can end on December 31. the effective date of the S election is the incorporation date. 5. almost certainly want to mark the Calendar Year option in box F. you probably. You should confer with a knowledgeable tax practitioner. however.2. You shouldn't need to use this space if you're filing the election on time. the new S corporation may be subject to special taxes and also be subject to several accounting rules too complicated for a doit-yourselfer. the IRS provides space for you to explain why you're filing a late 2553 election. that the effective date can not be more than 75 days before the date on which you’re making the election (typically March 15). however. At the very top of the form (see Figure 2). 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. city and state. You can also. and the employer identification number. Copyright © 2007. 3. When corporations become S corporations after being a C corporation. Enter your name and telephone information into Box H. Typically. the street address. you should not do this using a do-it-yourself approach.
) As mentioned earlier in this ebook. 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. M. is that you not try to file a late election yourself. You need to enter each shareholder’s social security number into column M. Idaho. by the way. You must use column L to identify the number of shares that each shareholder holds. use columns J. If you've already goofed up the S election deadline. Note: You won't need to worry about the third page of the 2553 form (see Figure 4). Louisiana. if needed. if any of your shareholders resides in a community property state (Arizona. Copyright © 2007. and N to name each shareholder in the new S corporation. Note that in the case of non-shareholder spouse. On page 2 of the 2553 form (see Figure 3). Washington. The IRS typically has special procedures for making these late elections. However. shareholder spouse. K. L. 7. you probably want to pay a lawyer. 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. Texas.My suggestion. Name and get signatures from each shareholder and. Nevada. New Mexico. you can enter those percentages into column L. (This should be December 31 in the case of most individuals. Wisconsin and sometimes Alaska and Puerto Rico). 2008 by Fast Easy Incorporation Kit web site . and you want to have someone who understands the most current special procedures do the election. 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. enter the month and day that each shareholder’s tax year years. You need to provide each shareholder name and address in column J. 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. If owners don’t hold shares but only percentage interests. California. certified public accountant or enrolled agent who specializes in S corporations to fix your election. You need to have each shareholder sign and date the S election in column K. Finally. Sign the S election Form.
Figure 3: Page 2 of an example completed 2553 Form. 2008 by Fast Easy Incorporation Kit web site . Copyright © 2007.
2008 by Fast Easy Incorporation Kit web site .Figure 4: Page 3 of an example completed 2553 Form. Copyright © 2007.
Wisconsin Alabama. Hawaii. Indiana. Oregon. North Dakota. Kentucky. Wyoming Then use the following mailing address or fax number to submit 2553 Department of Treasury Internal Revenue Service Center Cincinnati. Michigan. South Carolina. if you act immediately you can often still fix a problem before the election deadlines expire. Fax or Mail the 2553 Form to make the federal S election. Iowa.8. South Dakota. New Jersey. Colorado. New Hampshire. 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. Washington. Oklahoma. Nevada. Idaho. West Virginia. 2008 by Fast Easy Incorporation Kit web site . Utah. Pennsylvania. 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. UT 84201 Fax: (801)-620-7116 Some Closing Caveats and Comments Before I end this short booklet. Massachusetts. Louisiana. Texas. New Mexico. the IRS is so forgiving about late S elections that it's probably just as easy to fax the completed 2553 form. Alaska. Maryland. If your principal business. Arkansas. Especially with the IRS. Missouri. Delaware. Ohio. OH 45999 Fax: (859) 669-5748 Department of Treasury Internal Revenue Service Center Ogden. District of Columbia. Illinois. Florida. 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. I want to share a handful of quick comments: 1. Nebraska. Mississippi. Arizona. office or agency address is located in state of: Connecticut. but nowadays. Vermont. Maine. New York. Certified mail with a delivery receipt isn't a bad idea. Virginia. cross your fingers and then make a late election via mail if there's a deadline problem. you can see which mailing address or fax number you can use for your state using the table below. California. In any case. I used to suggest that people mail the 2553 form using certified mail with a delivery receipt. Montana. North Carolina. Kansas. Copyright © 2007. Rhode Island. attempt to immediately resolve any problems by telephoning the Secretary of State’s office or the local IRS office. Minnesota. Georgia. Tennessee.
6. 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). for example.” year that ends on the last day of any month of the year. 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. 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. 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. 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. 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. The “cost” of fouling up an S election.S. however. 3. if your corporation begins doing business in. It’s truly foolish to save yourself $500 of attorneys’ fees but end up paying an extra $5. county and city government agencies. before you finish setting up your corporation: In general. Something you should know now. I mentioned this before. 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. Most of the time. My strong suggestion to my clients is that they collect independent salary data to support what their S corporation pays shareholderemployees in wages. you should probably assume that the IRS will challenge an unreasonably low or high salary. don’t waste time trying to fix a problem you don’t understand. give up on the “do-it-yourself” approach and. can be several thousand dollars a year. Don’t put assets that may appreciate (such as real estate) into a corporation without consulting a knowledgeable tax attorney or a CPA. 5.2. For corporations that use a calendar year ending December 31. 4. enlist the services of a local professional. In fact. Note that with good salary data. If you can’t resolve the problems yourself. a regular C corporation can often have an accounting. Montana. a smart person who’s careful can work through the paperwork themselves. such as from the U. For example. Government’s Bureau of Labor Statistics. say. may often use a non-calendar year for their accounting. In other words. Copyright © 2007. you will need a certified public accountant or enrolled agent to prepare a corporate tax return for your new corporation. 7. or “fiscal. But if you’re having trouble. you often can support a salary that allows you to save on taxes. instead. S corporations may be able to use a non-calendar year. C corporations.000 in payroll taxes. 2008 by Fast Easy Incorporation Kit web site . Corporation tax returns for both C and S corporations are due 75 days after the end of the tax year.
Appendix A Sample Corporate By-laws Copyright © 2007. 2008 by Fast Easy Incorporation Kit web site .
4. Offices. present in person or represented by proxy. 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.1. 2. unless otherwise prescribed by the articles of incorporation or law. without notice other than announcement at the meeting. 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. 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. 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. 2. until a quorum will be present or represented. in addition to its registered office in the state in which it is incorporated. 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. Written notice of each shareholders meeting stating the place. 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. 2. At such reconvened meeting at which a quorum Copyright © 2007. Annual meetings of shareholders will be held at 10:00 a. both within and without the state in which it is incorporated. however. Special meetings of the shareholders. 2. for any purpose or purposes. If said notice is for a shareholders meeting other than an annual meeting.m. Quorum. Special Meetings. If. The presence at a shareholders meeting of the holders. Such request of the Board or shareholders will state the purpose or purposes of the proposed meeting. 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. such quorum will not be present or represented at any meeting of the shareholders. the shareholders entitled to vote thereat. will have power to adjourn the meeting from time to time.3. Notices. present in person or represented by proxy. Shareholder Meetings. and the business transacted at such meeting will be limited to the matters so stated in said notice and any matters reasonably related thereto. it will in addition state the purpose or purposes for which said meeting is called. 2008 by Fast Easy Incorporation Kit web site . Annual Meetings. have such other offices and places of business. The Company may.Bylaws of ______________________________________________ Formed under the laws of the state of _______________________ (the “Company”) 1. 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.
if a consent in writing. without prior notice and without a vote. Consents in Lieu of Meeting.5. 3. Purpose. No proxy will be voted on after eleven months from its date. Election. Number. Voting of Shares. present in person or represented by proxy. 2. setting forth the action so taken. at any meeting of shareholders may be taken without a meeting. Votes Per Share.5.5. in which case such express provision will govern and control the decision of such question.5. The business of the Company will be managed by or under the direction of the Board. 2.3. Proxies. Such list will be open to the examination of any shareholder. 2. by express provision of the articles of incorporation or law. 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. unless the question is one upon which. for any purpose germane to the meeting.2. a different vote is required. If any such adjournment is for more than 30 days. Any action required to be taken. will be signed by all of the holders of outstanding stock entitled to vote thereon. and may be inspected by any shareholder who is present. The list will also be produced and kept at the time and place of the meeting during the whole time thereof.1. Directors. any business may be transacted which might have been transacted at the meeting as originally notified.3. the vote of the holders.2. The number of directors constituting the Board will never be less than one and will be determined by resolution of the Board. the articles of incorporation or law directed or required to be exercised or done by the shareholders. at the registered office of the Company. a new notice of said meeting will be given to each shareholder entitled to vote at such meeting. or which may be taken. Directors need not be shareholders or residents of the state in which the Company is incorporated. Plurality. or if after the adjournment a new record date is fixed for the reconvened meeting. 2008 by Fast Easy Incorporation Kit web site . unless the proxy provides for a longer period.5. When a quorum is present at any meeting.5. during ordinary business hours for a period of at least ten days prior to the meeting. All directors will be elected by the shareholders at each annual shareholders meeting. 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.will be present or represented. 2. 3. 2. 3. Voting Lists. which may exercise all such power of the Company and do all such lawful acts and things as are not by these bylaws. at least ten days before every meeting of shareholders.4.1. Unless otherwise provided in the articles of incorporation.5. 2. Copyright © 2007. The officer who has charge of the stock ledger of the Company will prepare. 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. 3.
the directors present thereat may adjourn the meeting from time to time. Unless otherwise restricted by these bylaws or the articles of incorporation. The president or secretary will call a special meeting of the Board on the written request of two (b) directors or the sole director. if all members of the Board or committee. if any. 4. No notice to the directors will be necessary legally to convene this meeting. Special Meetings of the Board may be called by the president on one day’s notice to each director.2. by a majority vote of the shares entitled to vote at an election of directors. any director or the entire Board may be removed. provided a quorum is present. until a quorum is present.5. as the case may be. as the case may be.3. with or without cause. the Board will have the authority to fix the compensation of directors. Copyright © 2007. except as may be otherwise expressly provided by the articles of incorporation or law. Vacancies.5. 3. Annual Meeting.1. Compensation. and the writing or writings are filed with the minutes of proceedings of the Board or committee. 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. 2008 by Fast Easy Incorporation Kit web site . Unless otherwise restricted by these bylaws or the articles of incorporation. Meetings of the Board. 4. Unless otherwise restricted by these bylaws or the articles of incorporation. Members of committees of the Board may be allowed like compensation for attending committee meetings. A majority of the directors will constitute a quorum for the transaction of business at any meeting of the Board. No such payment will preclude any director from serving the Company in any other capacity and receiving compensation therefore. Regularly scheduled. 4. either personally or by mail or telegram.4. Regular Meetings. without notice other than announcement at the meeting.4. 4. Consent in Lieu of Meeting. If a quorum will not be present at any meeting. Plurality. The Board will meet as soon as practicable after the adjournment of each annual shareholders meeting. Quorum. 4. The directors may be reimbursed their expenses. 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. Removal. 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. though less than a quorum. 3.6. consent thereto in writing.3. No more than two (b) newly-created directorships may be filled by the Board between any two (b) successive annual shareholders meetings. Special Meetings. any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting. Vacancies in the Board may be filled by a majority vote of the remaining directors. 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. A director elected to fill a vacancy will be elected for the unexpired term of his predecessor.
6.1. Available Powers. Any such committee. 5.2. Elected Officers. cause the dissolution of the Company or a revocation of such a dissolution. In the absence of the president or in the event of his inability or refusal to act. fix the compensation of any member of such committee. 6. to the extent provided in the resolution of the Board establishing such committee and as limited by these bylaws. fill a vacancy in the Board or any committee thereof. The Board will elect a president and a secretary (collectively. Chairman of the Board. lease or exchange of all or substantially all of the Company’s property and assets other than in the ordinary course of business. or if there be no such determination. The chairman of the Board will preside at all meetings of the shareholders and the Board. adopt a plan of merger or consolidation. Vice Presidents. will have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company. In the absence of the chairman of the Board or in the event of his inability or refusal to act. No committee of the Board will have the power or authority to amend the articles of incorporation.1. 6. The Board may by resolution establish. the vice president (or in the event there be more than one vice president. 5. declare a dividend or authorize the issuance of stock. recommend to the shareholders the sale.1. The president will execute bonds.5. name or dissolve one or more committees.3. 5. President.2.1. Establishment. The president will be the chief executive officer of the Company. unless the resolution establishing such committee. amend or repeal any resolution of the Board which provides that it will not be so amendable or repealable. the vice presidents in the order determined by the Board. deeds of trust and other contracts requiring a seal under the seal of the Company. Unavailable Powers. these bylaws or the articles of incorporation expressly so provide. Each committee will keep regular minutes of its meetings and report the same to the Board when required. and may authorize the seal of the Company to be affixed to all papers which may require it. Officers. the articles of incorporation and law. or. then in the order of their election) will perform the duties of the president. the president will preside at all meetings of the shareholders and the Board. 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.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: 6.1. 2008 by Fast Easy Incorporation Kit web site . Copyright © 2007. 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 to consist of one or more of the directors.3. Committees of Directors. 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. 6. amend the bylaws of the Company.
at its regular meetings. 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.1. 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. an account of all his transactions as treasurer and of the financial condition of the Company. if any. 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. 6. The assistant secretary or. may have a president. taking proper vouchers for such disbursements.1. 2008 by Fast Easy Incorporation Kit web site . He will give. Such divisional officers will be appointed by. then in the order of their election or appointment) will. Assistant Treasurers. If required by the Board. The secretary will attend all meetings of the shareholders. 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. The treasurer will have custody of the corporate funds and securities. 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.4. assistant secretaries.1. it may be attested by his signature or by the signature of such assistant secretary. secretary. then in the order of their election or appointment) will. report to and serve at the pleasure of the Board and such other officers that the Board Copyright © 2007. 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. 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. papers. if there be more than one. will have all the powers of and be subject to all the restrictions upon the president. He will disburse the funds of the Company as may be ordered by the Board. retirement or removal from office of all books. Any number of such offices may be held by the same person. 6. vouchers. Assistant Secretaries. or cause to be given. resignation.and when so acting. The assistant treasurer or. 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.1. Treasurer. the assistant secretaries in the order determined by the Board (or if there be no such determination. or when the Board so requires. if there be more than one. treasurer or controller and one or more vice presidents. Divisional Officers. Each division of the Company. and will render to the president or to the Board. in the absence of the treasurer or in the event of his inability or refusal to act. 6.1. Secretary.6. money and other property of whatever kind in his possession or under his control belonging to the Company. in the absence of the secretary or in the event of his inability or refusal to act. and when so affixed.5. 6.8. 6. 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.7. assistant treasurers and other assistant officers.
1. possessing authority over or responsibility for any functions of the Board will be elected officers. Appointed Officers. provided that the Required Officers and any other officer. optional or other special rights of each class of stock or series thereof and the qualifications. disqualification. Entitlement to Certificates. retirement. participating.1 for elected officers. routinely possessing authority over or responsibility for any functions of the Board must be directors. prepared in accordance with applicable law. Every holder of the capital stock of the Company. a statement of the powers. Salaries. resignation or removal from office. Any number of offices may be held by the same person. 7. 6. 2008 by Fast Easy Incorporation Kit web site . 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. 7. unless the Board will by resolution provide that such class or series of stock will be uncertificated. Multiple. such as the chairman of the Board. where so authorized. The salaries of elected officers will be set by the Board. 6. unless these bylaws or the articles of incorporation otherwise provide.4. Officers need not be shareholders or residents of the state in which the Company is incorporated. Shareholder and Director Officeholders. in lieu of such statement. The Board will also fill any vacancy in an elected office. assistant officers and agents and may also remove such officers. provided that.may place in authority over them. 6.2. assistant officers and agents or delegate the power to do the same.3. will be entitled to have a certificate. 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 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. certifying the number of shares owned by him. and the titles and duties of such appointed officers may be as described in Section 6. preferences and relative. Election. to the extent allowed by law. Officers. 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. If the Company will be authorized to issue more than one class of capital stock or more than one series of any class.5. Share Certificates. Multiple Classes of Stock. as it will from time to time deem necessary. and (b) the Company will furnish a copy of such statement without charge to each shareholder upon request therefore. 7. 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.2. limitations or restrictions of such preferences and/or rights will. such as the chairman of the Board. designations. Copyright © 2007. 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. The Board may also appoint or delegate the power to appoint such other officers. 6. Vacancies.
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. at the Board’s election. Upon surrender to the Company or to its transfer agent. When authorizing such issue of a new certificate or certificates. to receive payment of any dividend or other distribution or allotment of any rights. to express consent to corporate action in writing without a meeting. stolen or destroyed certificate or certificates. cancel the old certificate and record the transaction upon its books. the Board may. assignation or authority to transfer said shares and of the payment of all taxes applicable to the transfer of said shares. the president or any vice president. the Board may fix. the Company will be obligated to issue a new certificate to the person entitled thereto.4. stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost. 7. 7. or the legal representative thereof. a record date. to exercise any rights in respect of any change. whether or not it will have express or other notice thereof. 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. in its discretion and as a condition precedent to the issuance thereof.3.7. 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. in advance. the secretary or an assistant secretary of the Company. 2008 by Fast Easy Incorporation Kit web site .5. the signatures of the officers of the Company may be facsimiles. 7. Where a certificate is countersigned by either (a) a transfer agent other than the Company or any employee thereof. of a certificate for shares duly endorsed or accompanied by proper evidence of succession.6. 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. Signatures. require the owner of such lost. Transfer of Stock. or (b) a registrar other than the Company or any employee thereof. and (b) the treasurer. except as otherwise required by law.7. Registered Shareholders. 7. or his legal representative. 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. 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. be valid for any reconvenings and readjournments of said meeting made no later than 90 days after said record date. Copyright © 2007. Fixing Record Date. 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. which will not be more than 60 nor less than ten days prior to any such action. the certificate may be issued by the Company with the same effect as if such officer held such office on the date of issue. stolen or destroyed certificate or certificates. Lost Certificates. conversion or exchange of stock or to effect any other lawful action. stolen or destroyed certificate or certificates. A record date validly fixed for any meeting of shareholders will be valid for any adjournment of said meeting and will. if any.
2. return receipt requested. 8. Whenever any notice is required to be given under law. as will be designated from time to time by the Board and stated in the notices thereof. a written waiver of such notice. 8. determines proper as a reserve or reserves to meet contingencies. If no such place is so designated. signed before or after the date of such waiver by the person or persons entitled to said notice. if given pursuant to clause (d) of the previous sentence.1. Means of Giving Notice.3. prepaid. within or without the state in which the Company is incorporated. for equalizing dividends. Any such notice will be deemed to be received (1) when delivered. Attendance Via Communications Equipment. Dividends. 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. or (3) when received. in its absolute discretion. 2008 by Fast Easy Incorporation Kit web site . Before payment of any dividend. if given pursuant to clause (a) of the previous sentence. Place of Meetings. Whenever. 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. said meetings will be held at the registered office of the Company. prepaid. notice is required to be given to any person.7. Reserves. 8. paid in cash. The Board will present at each annual meeting of shareholders. 8.6. 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. if given pursuant to clauses (b) or (c) of the previous sentence. return receipt requested. Waiver of 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. Copyright © 2007. the articles of incorporation or these bylaws. members of the Board. it will not be construed to mean personal notice. and at any special meeting of shareholders when called for by vote of the shareholders. (b) deposit in the United States mail.8.5. 8. Reports to Shareholders. Dividends on the capital stock of the Company. cable. All shareholders and directors meetings will be held at such place or places. (2) on the earlier of (i) the fourth day after deposit. will be deemed equivalent to such required notice. a full and clear statement of the business and condition of the Company. Miscellaneous. 8. telex or telegram transmission. the articles of incorporation or law. but such notice may be given by (a) personal delivery. the articles of incorporation or law. 8. and such participation in a meeting so held will constitute presence in person at the meeting. may be declared by the Board at any meeting thereof. Unless otherwise restricted by these bylaws. and the Board may modify or abolish any such reserve in the manner in which it was created. under these bylaws.4. property or shares of capital stock and as may be limited by these bylaws. or (ii) the time verification is made of delivery. (c) deposit with a recognized courier company. the articles of incorporation or law applicable to the Company. or (d) facsimile.
10. alteration.11. repealed or replaced by the Board and by the shareholders. The fiscal year of the Company will be fixed by resolution of the Board. altered. Seal. END Copyright © 2007. The seal may be used by causing it or a facsimile thereof to be impressed. amendment. repeal or replacement is contained in the notice of such special meeting. These bylaws may be adopted. Amendments. 8.8. or at any special meeting of the shareholders or of the Board if notice of such adoption. at any annual shareholders meeting or annual or regular meeting of the Board. Checks. 8. affixed or otherwise reproduced.9. The seal of the Company will be in such form as may from time to time be adopted by the Board. 2008 by Fast Easy Incorporation Kit web site . 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. Fiscal Year. unless and to the extent the power of either is limited by the articles of incorporation. 8.8. amended.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.