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Do-It-Yourself Incorporation Kit: New Mexico 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 Kits web site
In this document, I describe how you can, on your own and without the help of an accountant or attorney, set up a New Mexico corporation. Specifically, I provide step-bystep instructions for completing several legal and tax documents related to forming a New Mexico corporation, including filing the articles of incorporation with the New Mexico 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 New Mexico 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 New Mexico Corporation
Corporations deliver two huge benefits to New Mexico 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 Kits 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.
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” Or a business owner might. In other words. 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. 2008 by Fast Easy Incorporation Kits web site . The first potential tax saving associated with incorporating your business applies to what the tax laws call a C 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. Here’s what all this means. a modest amount of life insurance. drops a hammer on the customer’s head? The corporation may offer you some protection in this case. In other words. And here’s another example. small business corporations provide two tax benefits to their owners. I will personally pick up the tab. And this consultation doesn’t need to be particularly expensive. and so on. reimbursement of medical expenses. But you may still be personally responsible as the manager of the person dropping the hammer. A business owner might give a personal guarantee to a bank or vendor that says. An attorney knowledgeable in New Mexico business law can help you increase the liability protection that you gain from using as corporation for your business or investing. the corporation can provide benefits such as medical insurance. regularly get an attorney involved in your business or investment planning. 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. And this is true even if the only employee is a shareholder. If you’re extremely concerned about the asset protection features of setting up and operating a corporation. A C corporation (but not an S corporation which I discuss next) can typically provide tax-free fringe benefits to all of its employees. business owners may intentionally or unintentionally do things that remove or weaken the legal liability protection that a corporation provides. which makes things murkier.you from that sort of tort liability. one of your employees or subcontractors. employee housing (in some cases). in effect. 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. As a general rule. Finally. “I guarantee that my corporation will satisfy all of its obligations to you and if it doesn’t. for example. 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. What happens if someone working for you. The customer might reasonably argue that you should have done a better job managing the employee or subcontractor.
In a situation where a one-employee-one-shareholder corporation provides full health benefits and housing to its single shareholder-employee. 2008 by Fast Easy Incorporation Kits web site .000 each year. In all three of these cases.000 of profit.000 of business profit. the business owner pays roughly $18.deductions by tax laws.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. money that a business owner makes in an active trade or business is not subject just to income taxes.000 on the second $100. the employment taxes are called Social Security and Medicare taxes. though.000 of employment taxes. If the single shareholder-employee extracts all of the $200. In addition to income tax. Caution: If you want to explore or exploit the tax-free fringe benefits angle in more detail. suppose a sole proprietor. while tax deductions for the corporation. or a single shareholder in a regular corporation (called a C corporation by tax laws) makes $200. To understand this benefit.000 or $40.000 in tax on the first $100.000 of profit. the corporation might be providing $20.000 in tax on the first $100. In the case of a shareholder-employee in a corporation. A corporation also affords its owners a second potential tax saving opportunity. Note: In the case of a sole proprietorship or partners in a partnership.000. 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. (Those income taxes probably total another $30.000.000 of business profit. a partner in a partnership.000 and $10. Yet those benefits. To show you how the employment taxes work. This proprietor or partner will pay roughly $15. But—and here’s the neat thing—the deductions aren’t taxed to employees. note that these employment taxes are in addition to the income taxes he or she pays on the $200. would not be taxable to the employee. allow a small corporation’s owners to enjoy some of their business profits tax free. In a nutshell.000 a year in tax-free fringe benefits to that employee. 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. Tax-free fringe benefits. and I’m being a little rough here.) Copyright © 2007. Again. And this would mean that the annual tax savings would very likely run between $5. Subchapter S status.000 of profit and then roughly 3% on any profit above $100. and he or she will pay roughly $3. the employment taxes are called self-employment taxes.000 of business profit and $3.000 on the second $100. then.000 or $30. each business owner also pays an employment tax equal to roughly 15% on the first $100.000 in a year.
making an owner a corporate employee results in a new. $20. 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. the bank account for a corporation probably won’t be free. 2008 by Fast Easy Incorporation Kits web site . 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. a partnership or a C corporation. or $434 per employee. Perhaps this means wages equal to $60. bump the prices they charge you.000 in wages. or $9. And this tax return may cost anywhere from a few hundred dollars to a few thousand dollars annually.000. or S. or even more each month. For starters. a corporation increases the complexity and workload of administering your business. the employment tax equals 15% of only the $60. an S corporation saves the shareholder-employee roughly $9. This tax equals as much as 6. This increase in administrative complexity adds to your costs and your work. extra payroll tax (the Federal Unemployment Tax).000 annually. the corporation probably sets the shareholder-employee’s wages to a low but reasonable level. a corporation needs to file its own tax return. while the bank account for a sole proprietorship or informal partnership may be free if you keep a large-enough balance. The accountant and insurance company may. Increased Administrative Complexity… As a general rule. corporation. Related to this point. there are costs and headaches associated with incorporating.2% of the first $7. The bank may charge $10.000 an employer pays individual employees in wages. a corporation will probably increase your banking. For example.Things work differently if the corporation elects to be treated as a Subchapter S. In this case. So an obvious question is “Why wouldn’t everyone become a corporation?” Perhaps predictably. As compared to the case where the same business makes $200. accounting and insurance costs. While a sole proprietorship or informal real estate partnership may be able to keep its bookkeeping and income tax return preparation very simple.000 annually. similarly.000 a year but is operated as a sole proprietorship. In this case. Copyright © 2007.
A Slightly Different Set of Tax Rules… I also want to briefly summarize here the rules about how corporations are taxed. in any situation that isn’t like one of the preceding examples. Fortunately. 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. a corporation will mean that you need to have a board of directors (which will need to meet regularly such as monthly. 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. if a sole proprietor incorporates his or her business. For example. you may spend money on publications like this. I can’t summarize all of the tax law applicable to corporations in a few paragraphs. if a partnership incorporates its business. however. such as where you’ve got a larger group of people who are Copyright © 2007. You may buy the services of accountants and attorneys. You’ll also need to keep good minutes of these meetings. You will need to print new letterhead. In other cases. business cards. Similarly. again. And exchanges represent taxable events unless tax laws say otherwise. no tax effect should occur merely because the proprietorship has become a corporation. no tax effect should occur merely because the partnership has become a corporation. Obviously. quarterly or annually) and annual stockholders meetings. tax laws do “say otherwise” in the typical cases of a sole proprietor or partnership incorporating the business. Obviously. 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. 2008 by Fast Easy Incorporation Kits web site . Finally. 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. For example. And the control requirement is met when a partnership incorporates a partnership. the control requirement is met when a proprietor incorporates his or her business.A corporation may involve several hundred or even a few thousand dollars of startup expense. 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. You may need to consult a tax practitioner.
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. corporate income is taxed for federal tax purposes according to the following tax rate schedule: $0 to $50. get taxed on their income. many small corporations attempt to extract all of the business profits in the form of salary. Anytime the corporation earns or receives income. and the person contributing the property and transferring the liabilities will probably be taxed on the liabilities contributed. called C corporations. a corporation counts income and deductions the same way that a sole proprietorship or partnership does.001 to $75. In this case.000 – taxed at 15% $50. For this reason. Corporation Income and Corporation Deductions As a generalization.000. as part of the incorporation. that transfer of liabilities may trigger taxes. as part of incorporating a business.000 – taxed at 25% $75. If a sole proprietor or partnership incorporates a business and.001 to $335. the business needs to count that income in its accounting records. For example.000. At the time I’m writing this. the transferred liabilities ($10. the excess of the liabilities over the basis of the property gets counted as income or gain. transfers liabilities to the corporation. Let me also make one other point about incorporating a business.000 – taxed at 39% $335.000. The person contributing the truck gets taxed on the $10.001 to $100. Specifically.000 – taxed at 34% $100. 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. transferring liabilities as part of incorporation triggers taxes in two cases: Case #1: If. for example.000) exceed the basis of the property contributed ($0).contributing property to the corporation in stages. The mechanics of how this works are beyond the scope of this short discussion.000 – taxed at 34% Copyright © 2007. Case #2: If a person offloads more debt into the corporation than the depreciated basis of the property contributed to the corporation. meeting the “control after incorporation” requirement may not be quite so easy. 2008 by Fast Easy Incorporation Kits web site . But the effect is pretty easy to describe: The exchange in this case looks to the tax man like a sale. How C Corporations Get Taxed Regular corporations. Anytime the corporation incurs or pays some expense that is ordinary and necessary for its business.001 to $10. the business can count that deduction in its accounting records.
001 to $15. Finally. $25.000 of income. For example.000. which is also a New Mexico corporation. If the corporation makes half of its sales in New Mexico and half in Washington.6% on income above $1.000.000.000 of profit is apportioned to each of these four states. and a 34% federal tax on the last $25.000 of profit is apportioned to New Mexico and $50.750 in corporate income taxes on the first $100. based on the states in which the corporation owns property. Suppose a corporation (and it doesn’t matter whether the corporation is a C corporation or an S corporation) makes $300. the business still owes those states income tax on its profits.333. for example.000 of profit is apportioned to Washington. a 25% federal tax on the next $25.000 of profit is apportioned to New Mexico and $50. New Mexico and Oregon. $50.000. 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).000. for example. or $100. generally get taxed at a 15% federal rate. 2008 by Fast Easy Incorporation Kits web site .000. if the corporation’s payroll is evenly split between Nevada.000 – taxed at 35% $15. The apportionment formula apportions one third of the profit—another $100. if the corporation has half of its property in New Mexico and half of its property in California. and 7.000.333 – taxed at 35% A corporation that makes $100. If a corporation operates in multiple states. Copyright © 2007.000 of profit is apportioned to California.001 to $18. those shareholders pay tax on the dividend. the corporation pays $22. then another $50. Suppose. New Mexico imposes a state corporate income on corporations earning income in the state: 4. pays a 15% federal tax on the first $50.000.000. If you work out the math.4% on the next $500.333 – taxed at 38% Over $18.000.000 of profit. of the profit. the corporation apportions its profit—usually using something called a three-factor formula. too. the apportionment formula apportions one third of the profit—the final $100.$10. California. Corporate dividends paid by a C corporation.000—based on the payroll paid in the states where the business employs people. In addition. The three-factor apportionment formula apportions one-third of the $300. For example. Note.000.000 of income. for example. does business in other states that tax corporate profits. 6. that if the corporation pays a dividend to its shareholders out of its profits. Here’s a simple example of how this works.333.8% on the first $500. that a New Mexico business. In this case.000—based on the states in which the corporation sells its products or services.000. for example.
the corporation pays tax on the appreciation. an additional Copyright © 2007. employs people. the shareholders pay regular dividend tax rates (usually 15%) on the money.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. In essence. In these cases. or makes sales in a state. Stopping a Corporation If a corporation stops doing business. A limited liability company. For example. In my opinion. the 2 Most business advisors. and then distributing all of the cash that’s still left over to the shareholders. To the extent that distributions made to shareholders come from previously taxed profits. if the corporation distributes appreciated property (like real estate) to a shareholder. You’ll need to carefully consider the benefits and costs as they add up in your specific situation. 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%). a limited liability company is a “lite” version of a corporation. 2008 by Fast Easy Incorporation Kits web site . the shareholders get tax-free returns of capital. the corporation generally owes taxes to that state—either income taxes (which most states charge) or gross receipts taxes. the incorporation option is uneconomical for very small businesses. 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. me included. After the previously taxed profits are exhausted and to the extent of any capital contributed to the corporation. gives you all the same liability protection. But business owners need to understand that if a corporation owns property. or LLC. a corporation distributes property rather than cash. 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. the shareholders need to liquidate the corporation by selling all of the corporation’s assets. I will share these thoughts. For example. 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. One final note: If. paying off all of the corporation’s debts. think that the limited liability company is often a better choice for small businesses than a corporation. 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. On the other hand. I can’t give you a one-size-fits-all answer. as part of stopping business. however.
nm.” The name must contain the separate word “corporation”.state. a C corporation can often produce tax savings to the business owner because shareholder-employers can get tax-free fringe benefits. and then print this form. Or alternatively.us/corporations/pdf/charter/dpr. but burdens you with less red tape. for this form (see Figures 1 and 2) as shown below. You can’t use a name. As an added bonus. Forming the New Mexico Corporation The actual steps you take to form a New Mexico state corporation are almost comically simple. That said. you’re ready to fill the form out. if a regular business corporation. or “limited”. Download the Articles of Incorporation form from the New Mexico Corporations Bureau at the Public Regulations Commission’s web site. you can use the New Mexico Regulation Commission’s Corporations Information Inquiry form at: http://www.nmprc.htm By entering the name you want to use in the search form. Copyright © 2007. you’ll be able to see if there’s another business already using the name that you want. that’s the same or deceptively similar to another existing corporation’s name. Your first step in setting up an corporation is to check if the name you want to use is even available.nmprc. 2008 by Fast Easy Incorporation Kits web site . “company”. or a separate abbreviation of one of these words. Check if the corporation name you want is available. Identify the name you want to use for your new corporation. “professional association” or “professional corporation”. “incorporated”.us/cii. tax benefit (flexibility). “Article One. Here’s what you do: 1. if a professional corporation. 2. “chartered”. or web page address. so I won’t bang the LLC drum again. by the way. or “limited”. After you download and print the corporation application form.pdf 3. presumably you’ve already read this sort of comment from me before.corporation economically reduces business risk.nm.state. To do this. http://www. an S corporation can often save the owners thousands of dollars a year in income or payroll taxes. or a separate abbreviation of one of these words. The URL. Enter your business or investment name into the top line labeled.
” 5.Please note that the official corporate name is determined from Article One. Shares represent ownership interest in the corporation. If the shares are to be divided into classes. Copyright © 2007. and of the variations in the relative rights and preferences as between series insofar as they are to be fixed in the Articles of Incorporation. You need to tell the Secretary of State what your corporation will do. 2008 by Fast Easy Incorporation Kits web site . A “dba” name or “aka” name cannot be included as part of the corporate name in Article One. Acme Explosives Inc. Indicate the number of shares your corporation will offer. A corporation may be formed for any purpose or combination of purposes for which individuals lawfully may associate themselves. the purpose is wholesaling to mining companies. provide a statement of the designation of each series. Some corporations are created for a specific purpose and are intended to exist only for a specific period of time. Acme Explosives Ltd. State the period of duration The period of duration is the life span of your corporation. Every business corporation must designate in its certificate of incorporation the number of shares which the corporation shall have the authority to issue. and of any authority to be vested in the board of directors to establish series and fix and determine the variations in the relative rights and preferences as between series. and the preferences. If the corporation is to issue the shares of any preferred or special class in series. Acme Explosives Co. 1. In the example of Acme Explosives Corporation. or leave it blank which defaults to “perpetual. exactly as set forth including punctuation. State the purpose of your corporation. For example. You can list a specific date. provide a statement of the number of shares of each class. limitations and relative rights of the shares of each class. the designation of each class. 2. 6. 4. all of the following names should be acceptable: Acme Explosives Corporation Acme Explosives Company Acme Explosives Incorporated Acme Explosives Limited Acme Explosives Corp.
2008 by Fast Easy Incorporation Kits web site . Copyright © 2007.3. Figure 1: Page 1 New Mexico Article of Incorporation example. If there is any provision limiting or denying to shareholders the preemptive right to acquire unissued shares or securities convertible into such shares or carrying a right to subscribe to or acquire shares. provide a statement to that effect.
you are an incorporator. Name the initial board of directors State the names and addresses of the first governing board. Therefore. Each person named as incorporator in Article Seven must sign the Articles of Incorporation. but it’s really easiest and cheapest to just be your own registered agent. 8. provide the address of the corporation’s registered office within New Mexico. too. A Post Office Box is unacceptable. Note: If you do want or need someone else to be your registered agent. You can pay someone else to be this registered agent. enter your name on line two under Article Five labeled “Name of Initial Registered Agent. You can be the only director. 10. 2008 by Fast Easy Incorporation Kits web site . Name the incorporators. he or she will probably happily provide a registered agent service along with the tax preparation services. If a street address does not exist provide a detailed geographic description.” The resident agent must also complete and sign certificate of acceptance. Directors or trustees must be at least 18 year of age. Give the address of the corporation’s registered office In the next line. “New Mexico registered agents. 10.7. An incorporator is someone who performs the act of incorporation and who signs the articles of incorporation and delivers them for filing. Use a separate 8 ½ x 11 sheet as necessary for additional members. you will need to put your name and address as well as your signature on the form. that if you use a New Mexico accountant or bookkeeper to do your tax returns. Copyright © 2007.” Note. Use an additional 8 ½ x 11 white sheet for additional incorporators as needed. 9. Identify the Registered Agent New Mexico state wants to know the name for a real person within the state of New Mexico whom can act as the contact person should the state have questions or concerns about a corporation’s operation. In this case. Accordingly. Date and sign the form Enter the date the document was executed (signed). A New Mexico profit corporation is required to have at least one director. just Google on the phrase.
Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .Figure 2: Page 2 New Mexico Article of Incorporation example.
2008 by Fast Easy Incorporation Kits web site . 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.11. 3. and then sign the form to accept the appointment as resident agent for the corporation listed. however. but in general. And especially in the case where you are setting up a one-shareholder corporation which you will own and operate. the board elects officers to the roles of president. 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. You need to hold a stockholders meeting to elect a board of directors in accordance with your corporate by-laws. Box 1269 Santa Fe. New Mexico 87504-1269 Processing lead times vary. 12. You need to issue stock to the shareholders contributing cash or property. If you would like additional certified copies. you can use uncertificated stock. 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. Print your name on the top line. list the name of the corporation on the second. 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. Tip: If you want to use stock certificates. Issuing Stock. mail the completed form. Copyright © 2007. stock for which you don’t issue stock certificates—is probably easiest. Mail in the corporation application After you complete the application to form a corporation. treasurer. among other items. Your board of directors needs to hold a board of directors meeting in which. uncertificated stock— in other words. vice president. plus one duplicate copy and a check for $100 plus $1 for each 1000 shares to: Public Regulation Commission Corporations Bureau Chartered Documents Division P.O. add $25 per copy. Accept appointment of Resident Agent The second page of the document you printed from the Corporations Bureau web site is the Statement of Acceptance of Appointment by Designated Initial Registered Agent form. As a generalization. 2. it takes several weeks to get your corporation certificate back from the Secretary of State’s office.
In addition. Until your EIN is added to the permanent records. An EIN. the state requires a business license for businesses that operate in the state. apply for business licenses. If you’ve set up an corporation for a business.state. Getting an EIN for Your New Corporation You will need to get an Employer Identification Number. many cities also have business permit and license requirements. and file any tax returns required for your corporation such as income tax returns and payroll tax returns. Copyright © 2007. Accordingly.us/tax/forms/year99/acd31015. if you’re incorporating principally to minimize your legal liability. your bank will probably also require the board of directors to approve setting up a bank account. you want to do all this exactly right. Caution: The IRS takes up to two weeks to make your new EIN part of its permanent records. At this initial board meeting. also known as a Federal Tax Identification Number. if you do need an EIN. More information about the business license is available at the New Mexico Taxation and Revenue Department web site using the URL shown below: http://www. you can't file an electronic return. or EIN. 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.nm. 2008 by Fast Easy Incorporation Kits web site . and according to your corporate by-laws.pdf You can get local city business license information by calling city government offices in the town in which you plan to operate your business. Licensing a Business in New Mexico As you probably know if you’ve worked or run a business in New Mexico. online EIN application. you’ll want to identify and then acquire the necessary permits and licenses. identifies your business entity and often allows you to do things like open a bank account. On the other hand.secretary and so on. or pass an IRS Taxpayer Identification Number matching program. for your new corporation. make an electronic payment. 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.
Note: The IRS web site supplies definitions for most of the terms used in the online EIN application. click the "S Corporation" button. Go to the IRS website. Eastern time Saturday 6:00 a. When the online EIN application says "You have chosen Corporations" and asks what type of corporation.irs.m. At the time I'm writing this (spring of 2008).gov/modiein/individual/index.m.www4. Here are the precise steps for completing the online EIN application: 1.m.The online EIN application is not available 24 hours a day.m.m. If your new corporation will be treated for tax purposes as a regular corporation.Friday 6:00 a. Go to the IRS online EIN application web page to begin the EIN online application: https://sa2. to 12:00 a. If your new corporation will be treated for tax purposes as an S corporation. click the "Corporations" button. What's more. The online EIN application asks questions and you simply provide the answers by filling in the blanks and checking boxes and buttons.m. If a word or phrase appears blue and underlined. 2. Identify the legal and tax structures of your business entity.jsp Scroll to the bottom of the page and click the “Begin Application” button. click the "Corporations" button. Eastern time Sunday 7:00 p. Clicking on these definitions will not halt the progress of your application. click the "Corporations" button. you can click on it to see a definition in a new window. 2008 by Fast Easy Incorporation Kits web site . All you need to have is Internet access and a current Internet browser. to 9:00 p. to 12:30 a. When the online EIN application says "You have chosen Corporations" and asks what type of corporation. you also do not need special computer skills to complete the online EIN application. you do not need special software to complete the online EIN application. the IRS makes its online EIN application available according to this schedule: Monday . This step is very important because each type of legal and tax structure has different rules and regulations. also known as a C corporation. Copyright © 2007. Eastern time Fortunately. as well as tax reporting requirements.
do not place a period after that initial. Copyright © 2007. the online EIN application brings you to a page that explains your choice. If the IRS sends a letter to the corporation. Don't use any punctuation other than a hyphen (-) and ampersand (&) in the name. you should identify a corporation officer (probably the president or treasurer) as the person the IRS should contact when it has questions. When prompted by the online EIN application. In a small corporation. Application for IRS Individual Taxpayer Identification Number form. the person may be able to first obtain an Individual Tax Identification Number by completing a Form W-7. for example. if you use a middle initial. they send the letter to the corporation in care of the person. Go to the bottom of this page and click the “Continue” button. 3. Identify and describe a contact person of the corporation. 2008 by Fast Easy Incorporation Kits web site . The IRS considers the contact person to be the individual or business responsible for tax matters. State why you are requesting an EIN. explain why you are requesting an EIN. Click the “Continue” button. For instance.After you indicate what type of legal and tax structure you've chosen for the new entity. You need to designate a contact person--or what the online EIN application calls a principal officer. you will click the “Started a New Business” button. Note: If the contact person is a nonresident alien and therefore doesn't have a Social Security Number. owner or general partner. Your choices are: § § § § § Started a New Business Hired Employees Banking Purposes Changed Type of Organization Purchased Active Business In general. Click “Continue” after you identify the type of primary member or principal officer. 4. including name and Social Security or Individual Tax Identification Number. The IRS also wants information about the principal officer.
You need to provide a physical address of your corporation. This address must be a U. 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 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. This is typically the same state as the corporation's physical address. You can also provide a trade name. you will be taken to a page to provide that address. if any. 6. PLLC. Use the pull-down menu to select a month and year. etc). Again. however. you will need to provide the corporation's start date. Copyright © 2007.. Note: IRS systems only allow 35 characters on the street address line. When prompted. the trade name (if any). Corp. A trade name or "doing business as" name is another name under which the business or individual operates. This is the date on which the entity began doing business or will begin doing business. apartment numbers. 2008 by Fast Easy Incorporation Kits web site . When prompted by the online EIN application. If you do. again when prompted. If your address does not fit in 35 characters. The online EIN application automatically fills in the county and state based on the physical address previously entered. the county and state where the corporation is located. LC. suite numbers. If you use a trade name. However. the online EIN application allows only two special punctuation characters: hyphen (-) and ampersand (&). the state where the articles of organization or formation are filed.S. the name may not contain an ending such as LLC. and the corporation start date. Finally.5. address and may not be a PO box. identify the state where the articles of organization or articles of incorporation were filed. please make sure you provide the most essential address information (i. Do not use any punctuation except for a hyphen or a back slash. Click the “Continue” button. you need to provide the name of the corporation. The name you provide as the legal name of your corporation should match the articles of organization or articles of incorporation. if necessary. Provide the corporation's business location. You will also be required to provide a phone number. or Inc. Provide legal and trade name information about your corporation.e. you should verify that both of these bits of information are correct.
State what your corporation does. Click the “Continue” button. If you choose “Other” you will be taken to a second page of options. choose a category that best describes your business. If none of the categories fit. This program can be downloaded for free from: http://www. If none of these options fit. click on "Other" and then click the “Continue” button. Then click the “Continue” button. tobacco and firearms.com/products/acrobat/readstep2. 2008 by Fast Easy Incorporation Kits web site . quarterly federal excise tax returns. You can receive your EIN confirmation letter online or by mail. 9. you can click on that category for a further explanation. the IRS will send it to the mailing address you provided. address and start date information. Indicate whether the corporation is subject to special federal excise taxes. If you aren’t sure what a category includes. After you provide the corporation name. Click the “Continue” button. If you choose to receive it online. gambling. click on the “Other” button on this page and then type in what your corporation will do. though. Read the questions and answer them. that you will need to have the Adobe Reader program installed on your computer. Note.html. 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. the answer will be “No” to all four questions. and alcohol.adobe.Click the “Continue” button. If you choose to receive the letter by mail. For most people. 8. 7. When prompted. Copyright © 2007. This may take up to four weeks. the online EIN application asks a series of questions about vehicles.
Tell the assistor you received an EIN from the Internet but can't remember it. Monday through Friday. At the time I'm writing this document.10. Before calling for an EIN. online EIN application described in the preceding paragraphs. Applying for a New EIN using the Paper SS-4 Form As mentioned. For example. click the “Submit” button to receive your EIN. If you forget your EIN number." from www.gov/pub/irs-pdf/fss4. Note: The unique prefixes 20 and 26 identify the EIN as a number issued via the Internet. however. complete it. "Application for an Employer Identification Number.pdf Applying for a New EIN by Telephone You can also obtain an EIN immediately by calling (800) 829-4933. If any of the information is incorrect. The hours of operation are 7:00 a. However. the IRS also provides other procedures for obtaining an EIN. .m.10:00 p. call (800) 829-4933 and select EIN from the list of options in order to speak with an IRS employee.gov/pub/irs-pdf/iss4. you really should retrieve a copy of the SS-4 form and form instructions from the www.m. Then.irs.gov.irs. after you determine the information is correct. The last page of the online EIN application summarizes your information.irs. you can download a paper copy of the Form SS-4.gov web site and fill out the form as best you can before calling the number just given. Verify Your Information. the web address for the SS-4 form is: http://www. Copyright © 2007.pdf The web address for the SS-4 form instructions is: http://www. This process can take up to two minutes. local time. Print the summary page and check the information for errors. and then mail or fax the completed SS-4 to the appropriate address or fax number.irs. 2008 by Fast Easy Incorporation Kits web site . the easiest way to get an EIN number is through the interview-style. start a new application.
citizens or permanent residents.4 However. Idaho.Electing S Corporation Treatment for a Corporation A corporation may elect to be treated as a Subchapter S corporation.3 Caution: I want to caution you one last time about making the S election: Before you elect. If you want an S election to be effective as of January 1. you file Form 2553 with the Internal Revenue Service within 75 days from the start of the year. As compared to a regular corporation. Washington and Wisconsin) must consent to the S election. follow these steps: 1. you need to file the election by March 15. and (sometimes) substantial payroll tax savings. In a nutshell. estates of U. At the time I'm writing this. including pass-through of net operating losses. many tax traps exist for the unwary and the careless. (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. Enough said. New Mexico. called a C corporation. the precise web address for the 2553 form is: 3 The IRS may allow you to make a late S election. 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. Louisiana. and (4) shareholders must generally be either U. To complete and file the IRS Form 2553. (1) all shareholders (and shareholder spouses residing in community property states like Arizona. You will want to contact them or a knowledgeable local tax practitioner for current information about any “late Subchapter S election procedures” procedure. no federal corporate income tax. Get the IRS 2553 form from the www. 2008 by Fast Easy Incorporation Kits web site .fasteasyincorporationkits. Copyright © 2007. 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). also known as an S corporation. Download the election forms. citizens or permanent residents.SCorporationsExplained.irs. a corporation must meet certain eligibility requirements. California.com/taxationofcorporations. S corporations often save the small business owner significant amounts of federal corporation income tax and payroll taxes. in other words. Texas. In order to become an S corporation. S corporations offer their owners and shareholder-employees some wonderful tax planning opportunities.S.com and from the http://www.htm.gov web site. and certain trusts and charities. you need to file the election by August 15.S. (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). 4 You can get basic tax information on S corporations by visiting www. To make the election to be treated as an S corporation. Nevada.
The precise web address for the 2553 instructions at the time I'm writing this is: http://www.http://www.irs. to also grab an up-to-date copy of the form instructions.gov/pub/irs-pdf/f2553.irs.gov/pub/irs-pdf/i2553. if you're going to grab an up-to-date copy of the form. 2008 by Fast Easy Incorporation Kits web site .pdf It's also not a bad idea.pdf Copyright © 2007.
Figure 3: Page 1 of an example completed 2553 Form. Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .
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 should confer with a knowledgeable tax practitioner. However. 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.2. October or November—only complicates your tax accounting and produces no real benefit for you. you shouldn’t make the S election yourself. 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. 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. Enter your name and telephone information into Box H. the new S corporation may be subject to special taxes and also be subject to several accounting rules too complicated for a doit-yourselfer. or November. 3. the effective date of the S election is the incorporation date. You can also. Specify that the S corporation’s tax year will end on December 31. Accordingly. you should not do this using a do-it-yourself approach. in the block labeled “Type Or Print. almost certainly want to mark the Calendar Year option in box F. and the employer identification number. Note. Enter the effective date of your S election into Box E. the street address. At the very top of the form (see Figure 3). 4. 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. 2008 by Fast Easy Incorporation Kits web site . 5. however. address. Note: In the area beneath box H. Provide the corporation’s name. Tip: You can elect Subchapter S status for a corporation that’s previously operated as a regular C corporation. October. 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. you probably. Copyright © 2007. When corporations become S corporations after being a C corporation. Instead. city and state. however. You shouldn't need to use this space if you're filing the election on time. however. and EIN information. that the effective date can not be more than 75 days before the date on which you’re making the election (typically March 15). S corporation fiscal years can end on December 31. Typically. the IRS provides space for you to explain why you're filing a late 2553 election.” you enter the name of the corporation. or on the last day of September.
Finally. Name and get signatures from each shareholder and. 2008 by Fast Easy Incorporation Kits web site . by the way. 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. M. You need to provide each shareholder name and address in column J. Washington. If you've already goofed up the S election deadline. 7. you can enter those percentages into column L.) As mentioned earlier in this ebook. and N to name each shareholder in the new S corporation. use columns J. enter the month and day that each shareholder’s tax year years. Idaho. you probably want to pay a lawyer. 6. However.My suggestion. certified public accountant or enrolled agent who specializes in S corporations to fix your election. if any of your shareholders resides in a community property state (Arizona. Copyright © 2007. 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. You must use column L to identify the number of shares that each shareholder holds. Sign the S election Form. If owners don’t hold shares but only percentage interests. Note that in the case of non-shareholder spouse. 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. is that you not try to file a late election yourself. Louisiana. You need to enter each shareholder’s social security number into column M. Texas. if needed. Note: You won't need to worry about the third page of the 2553 form (see Figure 5). L. On page 2 of the 2553 form (see Figure 4). Wisconsin and sometimes Alaska and Puerto Rico). California. and you want to have someone who understands the most current special procedures do the election. You need to have each shareholder sign and date the S election in column K. The IRS typically has special procedures for making these late elections. (This should be December 31 in the case of most individuals. New Mexico. 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. shareholder spouse. K. Nevada.
Copyright © 2007.Figure 4: Page 2 of an example completed 2553 Form. 2008 by Fast Easy Incorporation Kits web site .
Copyright © 2007.Figure 5: Page 3 of an example completed 2553 Form. 2008 by Fast Easy Incorporation Kits web site .
2008 by Fast Easy Incorporation Kits web site . Wyoming Then use the following mailing address or fax number to submit 2553 Department of Treasury Internal Revenue Service Center Cincinnati. Montana. Vermont. Fax or Mail the 2553 Form to make the federal S election. South Carolina. you can see which mailing address or fax number you can use for your state using the table below. Washington. OH 45999 Fax: (859) 669-5748 Department of Treasury Internal Revenue Service Center Ogden. Arkansas. Alaska. Massachusetts. Mississippi. Especially with the IRS. Utah. Georgia. I used to suggest that people mail the 2553 form using certified mail with a delivery receipt. South Dakota. In any case. New Mexico. Maine. Nebraska. Louisiana. if you act immediately you can often still fix a problem before the election deadlines expire. Oklahoma. Virginia. Illinois. District of Columbia. New York. 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. Oregon. but nowadays. Idaho. Tennessee. West Virginia. Hawaii. Kansas. 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. Wisconsin Alabama. Kentucky. the IRS is so forgiving about late S elections that it's probably just as easy to fax the completed 2553 form. Nevada. Michigan. Iowa.8. North Dakota. Arizona. UT 84201 Fax: (801)-620-7116 Some Closing Caveats and Comments Before I end this short booklet. 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. New Jersey. Florida. New Hampshire. Missouri. Copyright © 2007. I want to share a handful of quick comments: 1. attempt to immediately resolve any problems by telephoning the Secretary of State’s office or the local IRS office. office or agency address is located in state of: Connecticut. If your principal business. Rhode Island. Indiana. Ohio. Pennsylvania. Colorado. Minnesota. California. North Carolina. Certified mail with a delivery receipt isn't a bad idea. Maryland. Delaware. Texas. cross your fingers and then make a late election via mail if there's a deadline problem.
7. for example. if your corporation begins doing business in. however. you should probably assume that the IRS will challenge an unreasonably low or high salary. Montana. enlist the services of a local professional. before you finish setting up your corporation: In general. such as from the U. 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. 2008 by Fast Easy Incorporation Kits web site . say. 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. instead. C corporations. It’s truly foolish to save yourself $500 of attorneys’ fees but end up paying an extra $5. Copyright © 2007. 4. 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. can be several thousand dollars a year. you will need a certified public accountant or enrolled agent to prepare a corporate tax return for your new corporation. give up on the “do-it-yourself” approach and. 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).2. Don’t put assets that may appreciate (such as real estate) into a corporation without consulting a knowledgeable tax attorney or a CPA. Corporation tax returns for both C and S corporations are due 75 days after the end of the tax year. In other words. Something you should know now. In fact. If you can’t resolve the problems yourself. Government’s Bureau of Labor Statistics. For corporations that use a calendar year ending December 31.” year that ends on the last day of any month of the year. 6. may often use a non-calendar year for their accounting. 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. For example. don’t waste time trying to fix a problem you don’t understand. My strong suggestion to my clients is that they collect independent salary data to support what their S corporation pays shareholderemployees in wages. 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 if you’re having trouble. 3. S corporations may be able to use a non-calendar year. county and city government agencies.000 in payroll taxes. 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.S. Note that with good salary data. or “fiscal. a smart person who’s careful can work through the paperwork themselves. 5. The “cost” of fouling up an S election. a regular C corporation can often have an accounting. I mentioned this before. you often can support a salary that allows you to save on taxes.
2008 by Fast Easy Incorporation Kits web site .Appendix A Sample Corporate By-laws Copyright © 2007.
Special meetings of the shareholders.4. 2. 2. it will in addition state the purpose or purposes for which said meeting is called. 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. The Company may. Offices. 2. however. the shareholders entitled to vote thereat. Special Meetings. The presence at a shareholders meeting of the holders. present in person or represented by proxy. until a quorum will be present or represented. and the business transacted at such meeting will be limited to the matters so stated in said notice and any matters reasonably related thereto. such quorum will not be present or represented at any meeting of the shareholders.3.m. for any purpose or purposes. 2. both within and without the state in which it is incorporated. 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. 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. will have power to adjourn the meeting from time to time. 2008 by Fast Easy Incorporation Kits web site . Notices. Written notice of each shareholders meeting stating the place. Annual Meetings. Such request of the Board or shareholders will state the purpose or purposes of the proposed meeting. Quorum. have such other offices and places of business.2. If said notice is for a shareholders meeting other than an annual meeting. Shareholder Meetings.Bylaws of ______________________________________________ Formed under the laws of the state of _______________________ (the “Company”) 1. unless otherwise prescribed by the articles of incorporation or law. 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. without notice other than announcement at the meeting. At such reconvened meeting at which a quorum Copyright © 2007. 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. in addition to its registered office in the state in which it is incorporated. 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. 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. 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. Annual meetings of shareholders will be held at 10:00 a. 2.1. present in person or represented by proxy.
3.5. Copyright © 2007. Directors need not be shareholders or residents of the state in which the Company is incorporated. Number. a new notice of said meeting will be given to each shareholder entitled to vote at such meeting. at least ten days before every meeting of shareholders. The list will also be produced and kept at the time and place of the meeting during the whole time thereof.5.1. and may be inspected by any shareholder who is present. 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. When a quorum is present at any meeting. Plurality.2. 2. by express provision of the articles of incorporation or law. if a consent in writing. 3. 2008 by Fast Easy Incorporation Kits web site . 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. 2. 3. Voting of Shares. any business may be transacted which might have been transacted at the meeting as originally notified.5. a different vote is required. without prior notice and without a vote. will be signed by all of the holders of outstanding stock entitled to vote thereon.5. at the registered office of the Company. 3.2.4. or if after the adjournment a new record date is fixed for the reconvened meeting. All directors will be elected by the shareholders at each annual shareholders meeting. Election. which may exercise all such power of the Company and do all such lawful acts and things as are not by these bylaws. 2. Such list will be open to the examination of any shareholder. 3.5. unless the question is one upon which. the vote of the holders. 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. setting forth the action so taken. in which case such express provision will govern and control the decision of such question. Voting Lists. present in person or represented by proxy. No proxy will be voted on after eleven months from its date. for any purpose germane to the meeting.1.3. Consents in Lieu of Meeting. Any action required to be taken. 2. Votes Per Share. The business of the Company will be managed by or under the direction of the Board. Proxies. 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. If any such adjournment is for more than 30 days. unless the proxy provides for a longer period. the articles of incorporation or law directed or required to be exercised or done by the shareholders.5. 2. 2.will be present or represented. Directors.5. at any meeting of shareholders may be taken without a meeting. during ordinary business hours for a period of at least ten days prior to the meeting. Purpose. The officer who has charge of the stock ledger of the Company will prepare. or which may be taken.
the Board will have the authority to fix the compensation of directors. 4. 2008 by Fast Easy Incorporation Kits web site . 4. either personally or by mail or telegram. Plurality. Annual Meeting. A majority of the directors will constitute a quorum for the transaction of business at any meeting of the Board. Unless otherwise restricted by these bylaws or the articles of incorporation. The directors may be reimbursed their expenses.4.2. without notice other than announcement at the meeting.5. consent thereto in writing.3. Removal. 3. 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. with or without cause.5. though less than a quorum.1. if any. No such payment will preclude any director from serving the Company in any other capacity and receiving compensation therefore. and the writing or writings are filed with the minutes of proceedings of the Board or committee. 4. The Board will meet as soon as practicable after the adjournment of each annual shareholders meeting. No notice to the directors will be necessary legally to convene this meeting. No more than two (b) newly-created directorships may be filled by the Board between any two (b) successive annual shareholders meetings. 4. Unless otherwise restricted by these bylaws or the articles of incorporation. Compensation. by a majority vote of the shares entitled to vote at an election of directors. as the case may be.3. Quorum. If a quorum will not be present at any meeting.6. A director elected to fill a vacancy will be elected for the unexpired term of his predecessor. Vacancies in the Board may be filled by a majority vote of the remaining directors. 3. 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. 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. until a quorum is present. provided a quorum is present. Meetings of the Board. any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting. 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. Regular Meetings. except as may be otherwise expressly provided by the articles of incorporation or law. Unless otherwise restricted by these bylaws or the articles of incorporation. Vacancies. Special Meetings. if all members of the Board or committee. Regularly scheduled. Consent in Lieu of Meeting. The president or secretary will call a special meeting of the Board on the written request of two (b) directors or the sole director. as the case may be. the directors present thereat may adjourn the meeting from time to time. Copyright © 2007. any director or the entire Board may be removed. Special Meetings of the Board may be called by the president on one day’s notice to each director.4. 4. Members of committees of the Board may be allowed like compensation for attending committee meetings.
name or dissolve one or more committees. or if there be no such determination. or. Chairman of the Board. In the absence of the president or in the event of his inability or refusal to act. Elected Officers. each committee to consist of one or more of the directors. Vice Presidents. amend the bylaws of the Company. the vice president (or in the event there be more than one vice president. The president will be the chief executive officer of the Company. 5.2. 5. Available Powers. 6. will have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company.1.1. declare a dividend or authorize the issuance of stock. 6. Each committee will keep regular minutes of its meetings and report the same to the Board when required. Officers. Unavailable Powers. Committees of Directors.1. 2008 by Fast Easy Incorporation Kits web site .1. these bylaws or the articles of incorporation expressly so provide. Any such committee. fix the compensation of any member of such committee. The chairman of the Board will preside at all meetings of the shareholders and the Board. Establishment. fill a vacancy in the Board or any committee thereof. lease or exchange of all or substantially all of the Company’s property and assets other than in the ordinary course of business.5. 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. 6.3. 6. Copyright © 2007. and may authorize the seal of the Company to be affixed to all papers which may require it. adopt a plan of merger or consolidation. cause the dissolution of the Company or a revocation of such a dissolution. 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. The Board may by resolution establish. 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. No committee of the Board will have the power or authority to amend the articles of incorporation.3. In the absence of the chairman of the Board or in the event of his inability or refusal to act. The Board will elect a president and a secretary (collectively. the articles of incorporation and law. deeds of trust and other contracts requiring a seal under the seal of the Company. then in the order of their election) will perform the duties of the president. President.2. 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. unless the resolution establishing such committee. The president will execute bonds. the president will preside at all meetings of the shareholders and the Board. to the extent provided in the resolution of the Board establishing such committee and as limited by these bylaws. recommend to the shareholders the sale.1. 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. 5.1.
money and other property of whatever kind in his possession or under his control belonging to the Company. 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. He will give. 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. 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. 6. Secretary. or when the Board so requires. in the absence of the treasurer or in the event of his inability or refusal to act. 6. in the absence of the secretary or in the event of his inability or refusal to act. 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. then in the order of their election or appointment) will. Divisional Officers. and when so affixed.1. 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.5. The treasurer will have custody of the corporate funds and securities.1. 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. will have all the powers of and be subject to all the restrictions upon the president. papers. treasurer or controller and one or more vice presidents. The assistant treasurer or. Treasurer. if any. Assistant Secretaries. it may be attested by his signature or by the signature of such assistant secretary.6. report to and serve at the pleasure of the Board and such other officers that the Board Copyright © 2007.1. 6. assistant secretaries. and will render to the president or to the Board. Each division of the Company. the assistant treasurers in the order determined by the Board (or if there be no such determination.1. secretary. taking proper vouchers for such disbursements. The secretary will attend all meetings of the shareholders. 6. 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. vouchers.7. or cause to be given. He will disburse the funds of the Company as may be ordered by the Board. 2008 by Fast Easy Incorporation Kits web site . if there be more than one. Such divisional officers will be appointed by. Assistant Treasurers. If required by the Board. 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. resignation.8. Any number of such offices may be held by the same person.and when so acting. 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. assistant treasurers and other assistant officers. then in the order of their election or appointment) will. retirement or removal from office of all books. the assistant secretaries in the order determined by the Board (or if there be no such determination.4. The assistant secretary or. an account of all his transactions as treasurer and of the financial condition of the Company. if there be more than one. at its regular meetings. 6. may have a president.
6. Appointed Officers. 7. provided that. in lieu of such statement.2. designations. Shareholder and Director Officeholders. possessing authority over or responsibility for any functions of the Board will be elected officers. Multiple Classes of Stock. The salaries of elected officers will be set by the Board. Salaries. prepared in accordance with applicable law. unless the Board will by resolution provide that such class or series of stock will be uncertificated. 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. disqualification. The Board will also fill any vacancy in an elected office.may place in authority over them.3. unless these bylaws or the articles of incorporation otherwise provide. Any number of offices may be held by the same person. limitations or restrictions of such preferences and/or rights will. Share Certificates. a statement of the powers. routinely possessing authority over or responsibility for any functions of the Board must be directors. 6. optional or other special rights of each class of stock or series thereof and the qualifications. 7. preferences and relative.4. 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. retirement. will be entitled to have a certificate. where so authorized. 6. and the titles and duties of such appointed officers may be as described in Section 6. 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. provided that the Required Officers and any other officer. as it will from time to time deem necessary. 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. such as the chairman of the Board. The Board may also appoint or delegate the power to appoint such other officers. and (b) the Company will furnish a copy of such statement without charge to each shareholder upon request therefore. Copyright © 2007. If the Company will be authorized to issue more than one class of capital stock or more than one series of any class. certifying the number of shares owned by him.5.2. 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. assistant officers and agents or delegate the power to do the same.1. Officers. 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. Multiple. such as the chairman of the Board. 2008 by Fast Easy Incorporation Kits web site . Officers need not be shareholders or residents of the state in which the Company is incorporated. Vacancies. Every holder of the capital stock of the Company. Entitlement to Certificates. 6. to the extent allowed by law. 7. Election. assistant officers and agents and may also remove such officers. resignation or removal from office.1 for elected officers. participating.
7. cancel the old certificate and record the transaction upon its books. a record date. When authorizing such issue of a new certificate or certificates.6. or his legal representative. Upon surrender to the Company or to its transfer agent. 7. the president or any vice president. to receive payment of any dividend or other distribution or allotment of any rights. 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. of a certificate for shares duly endorsed or accompanied by proper evidence of succession.5. the secretary or an assistant secretary of the Company. require the owner of such lost. except as otherwise required by law. Copyright © 2007.4. in its discretion and as a condition precedent to the issuance thereof. Lost Certificates. 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. or (b) a registrar other than the Company or any employee thereof. 7. in advance. 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. Registered Shareholders.7. 7. Where a certificate is countersigned by either (a) a transfer agent other than the Company or any employee thereof. or the legal representative thereof. if any. A record date validly fixed for any meeting of shareholders will be valid for any adjournment of said meeting and will. to express consent to corporate action in writing without a meeting. 2008 by Fast Easy Incorporation Kits web site . stolen or destroyed certificate or certificates. stolen or destroyed certificate or certificates.3. 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. stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost. the signatures of the officers of the Company may be facsimiles. conversion or exchange of stock or to effect any other lawful action. whether or not it will have express or other notice thereof.7. and (b) the treasurer. assignation or authority to transfer said shares and of the payment of all taxes applicable to the transfer of said shares. the Board may. be valid for any reconvenings and readjournments of said meeting made no later than 90 days after said record date. Signatures. at the Board’s election. 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. an assistant treasurer. to exercise any rights in respect of any change. the Board may fix. the certificate may be issued by the Company with the same effect as if such officer held such office on the date of issue. Fixing Record Date. which will not be more than 60 nor less than ten days prior to any such action. the Company will be obligated to issue a new certificate to the person entitled thereto. 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. stolen or destroyed certificate or certificates. Transfer of Stock. 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.
Place of Meetings. prepaid. the articles of incorporation or law. under these bylaws.1. the articles of incorporation or law. The Board will present at each annual meeting of shareholders. signed before or after the date of such waiver by the person or persons entitled to said notice. Before payment of any dividend. and the Board may modify or abolish any such reserve in the manner in which it was created. members of the Board. and at any special meeting of shareholders when called for by vote of the shareholders. if given pursuant to clause (d) of the previous sentence. Dividends. Whenever. Any such notice will be deemed to be received (1) when delivered. 8. a full and clear statement of the business and condition of the Company. the articles of incorporation or law applicable to the Company. 8. and such participation in a meeting so held will constitute presence in person at the meeting. if given pursuant to clauses (b) or (c) of the previous sentence. but such notice may be given by (a) personal delivery. 8. the articles of incorporation or these bylaws. will be deemed equivalent to such required notice. or (3) when received.6. in its absolute discretion. (b) deposit in the United States mail. or (d) facsimile. Dividends on the capital stock of the Company. return receipt requested. within or without the state in which the Company is incorporated. Whenever any notice is required to be given under law. 8. 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.8. cable. property or shares of capital stock and as may be limited by these bylaws. Waiver of Notice. If no such place is so designated. as will be designated from time to time by the Board and stated in the notices thereof. notice is required to be given to any person.3. 8. return receipt requested. paid in cash. telex or telegram transmission. (2) on the earlier of (i) the fourth day after deposit. 8. for equalizing dividends. 8.7. Attendance Via Communications Equipment. Means of Giving Notice. All shareholders and directors meetings will be held at such place or places. 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. prepaid. if given pursuant to clause (a) of the previous sentence. 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. 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.4.2. a written waiver of such notice. Miscellaneous. Reports to Shareholders. (c) deposit with a recognized courier company. said meetings will be held at the registered office of the Company. may be declared by the Board at any meeting thereof. 2008 by Fast Easy Incorporation Kits web site . or (ii) the time verification is made of delivery. Unless otherwise restricted by these bylaws. Reserves. Copyright © 2007. it will not be construed to mean personal notice. determines proper as a reserve or reserves to meet contingencies.5.
amended. amendment.9.8. 2008 by Fast Easy Incorporation Kits web site . repealed or replaced by the Board and by the shareholders. unless and to the extent the power of either is limited by the articles of incorporation. These bylaws may be adopted. Checks. The seal may be used by causing it or a facsimile thereof to be impressed. The fiscal year of the Company will be fixed by resolution of the Board. 8. affixed or otherwise reproduced. altered.11. alteration. at any annual shareholders meeting or annual or regular meeting of the Board. Amendments. 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.10. or at any special meeting of the shareholders or of the Board if notice of such adoption.8. Seal. repeal or replacement is contained in the notice of such special meeting. END Copyright © 2007. The seal of the Company will be in such form as may from time to time be adopted by the Board. 8. 8.