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Do-It-Yourself Incorporation Kit: Rhode Island Corporation
By Stephen L. Nelson, CPA, MBA (finance), MS (taxation)
This Do-It-Yourself Guide was written to share basic information about formation of corporations and their taxation. The paper is not intended to replace the services of a competent legal, tax or business advisor. If legal or other expert assistance is required, the services of a professional should be sought. Furthermore, while both the publisher and author have made every effort to offer the most current, correct and clearly expressed information possible, inadvertent errors can occur and the rules and regulations governing corporations, c corporations, s corporations, accounting standards, and tax laws often change. Further, the application and impact of rules and laws can vary widely from case to case based upon the unique facts involved. Be careful! CIRCULAR 230 NOTICE: Under recently issued IRS regulations, we must inform you that any U.S. tax advice contained in the body of this white paper was not intended or written to be used, and cannot be used, by the reader for the purpose of avoiding penalties that may be imposed under federal tax law. By regulation, a taxpayer cannot rely on professional advice to avoid federal tax penalties unless that advice is reflected in a comprehensive tax opinion that conforms to strict requirements.
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In this document, I describe how you can, on your own and without the help of an accountant or attorney, set up a Rhode Island corporation. Specifically, I provide stepby-step instructions for completing several legal and tax documents related to forming a Rhode Island corporation, including filing the articles of incorporation with the Rhode Island 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 Rhode Island 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 Rhode Island Corporation
Corporations deliver two huge benefits to Rhode Island business owners. One benefit is a legal benefit and the other is a tax benefit.
Benefit One: Limited Liability…
The big legal benefit that corporations provide business owners with is liability protection. What this means, practically speaking, is that the business owners are not liable for the debts of the business merely by virtue of their ownership.
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To best understand what this limited liability protection means, however, you need to consider the situation that exists with respect to businesses that are un-incorporated. In a sole proprietorship, for example, the proprietor is responsible for all the debts of the business. If the business signs a contract with some customer or vendor and then breaches the contract or if the business fails to deliver on a financial promise made to some employee, the owner is liable. The owner can’t say, “Oh, sorry, that was my business that made the promise or commitment.” A business organized as a general partnership works the same way. If the business breaches a contract or makes and then breaks a financial promise, the partners in the partnership are liable. These owners can’t say, “Oh, sorry, that was the partnership… not me.” In comparison, with a corporation, an owner (called a stockholder or shareholder) can say, “oh, sorry, that was the corporation’s debt… not me.” Consider what this means for a small business. In a worst case scenario, outside creditors (these outside creditors would obviously include people like the bank and vendors but might also include other people or organizations that you owe money to like customers and employees) might be able to strip the corporation of all its assets to pay a debt or force the corporation to liquidate to pay it debts. But these outside creditors would not be able to look to the corporation’s owners for repayment merely because they own the corporation. Obviously, the legal liability protection provided by a corporation can be extremely valuable. One local attorney I often collaborate with tells his clients that a corporation (as well as its cousin, the limited liability company) protects businesses and investors from the worst case scenario—which in his mind is a “slip and fall” accident on the business’s or investor’s property. With a corporation as the property owner, so says my attorney friend, the “worst case scenario” is liquidation of the corporation. That liquidation means the people who own the corporation wind up with nothing—which isn’t good. But all the owners lose is what they’ve invested in the corporation. In comparison, without a corporation, the business owner’s or investor’s “worst case scenario” if there’s a “slip and fall” accident is that the owner or investor can lose almost everything they own.1 In other words, the business owners or investors could lose not only their investment in the business but many other personal assets. Let me issue a caveat here, however. You may not get as much legal liability protection from a corporation as you want or hope. Say, for example, that you’re a roofing contractor operating as a corporation. If you personally happen to drop a hammer onto the customer’s head during the roofing project, your corporation probably won’t protect
A tangential side note: Even in the worst case scenario, you typically can’t really lose everything. State and federal laws often protect individuals from the claims of creditors. For example, retirement savings may be protected, as well as a certain amount of equity in a home, and even many personal belongings.
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And here’s another example. 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 first potential tax saving associated with incorporating your business applies to what the tax laws call a C corporation. business owners may intentionally or unintentionally do things that remove or weaken the legal liability protection that a corporation provides. In other words. In other words. 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. The customer might reasonably argue that you should have done a better job managing the employee or subcontractor. Here’s what all this means. for example. A business owner might give a personal guarantee to a bank or vendor that says. employee housing (in some cases). “I guarantee that my corporation will satisfy all of its obligations to you and if it doesn’t. in effect. small business corporations provide two tax benefits to their owners. the customer can probably look not only to your corporation for payment of damages related to the dropped hammer but also to you personally. As a general rule. reimbursement of medical expenses. Finally. the corporation can provide benefits such as medical insurance. And this is true even if the only employee is a shareholder. 2008 by Fast Easy Incorporation Kits web site . drops a hammer on the customer’s head? The corporation may offer you some protection in this case. one of your employees or subcontractors.” Or a business owner might. 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. What happens if someone working for you. and so on. I will personally pick up the tab. If you’re extremely concerned about the asset protection features of setting up and operating a corporation.you from that sort of tort liability. which makes things murkier. A C corporation (but not an S corporation which I discuss next) can typically provide tax-free fringe benefits to all of its employees. And this consultation doesn’t need to be particularly expensive. 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. But you may still be personally responsible as the manager of the person dropping the hammer. a modest amount of life insurance. regularly get an attorney involved in your business or investment planning. An attorney knowledgeable in Rhode Island business law can help you increase the liability protection that you gain from using as corporation for your business or investing.
while tax deductions for the corporation.) Copyright © 2007. allow a small corporation’s owners to enjoy some of their business profits tax free. the employment taxes are called Social Security and Medicare taxes. then. each business owner also pays an employment tax equal to roughly 15% 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. But—and here’s the neat thing—the deductions aren’t taxed to employees. 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. And this would mean that the annual tax savings would very likely run between $5. the corporation might be providing $20. In the case of a shareholder-employee in a corporation. would not be taxable to the employee. a partner in a partnership. (Those income taxes probably total another $30.000. In a nutshell.000 of profit.000 of profit.000 of business profit. the business owner pays roughly $18. 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. Caution: If you want to explore or exploit the tax-free fringe benefits angle in more detail. If the single shareholder-employee extracts all of the $200. Tax-free fringe benefits. Subchapter S status. money that a business owner makes in an active trade or business is not subject just to income taxes. To show you how the employment taxes work.000 in a year.000 or $40.000 and $10. In a situation where a one-employee-one-shareholder corporation provides full health benefits and housing to its single shareholder-employee. though. A corporation also affords its owners a second potential tax saving opportunity.000 of business profit and $3. or a single shareholder in a regular corporation (called a C corporation by tax laws) makes $200. suppose a sole proprietor.000 a year in tax-free fringe benefits to that employee. Note: In the case of a sole proprietorship or partners in a partnership. Yet those benefits.000 in tax on the first $100.000 of employment taxes. note that these employment taxes are in addition to the income taxes he or she pays on the $200.000 of profit and then roughly 3% on any profit above $100.000 of business profit. the employment taxes are called self-employment taxes.deductions by tax laws.000. In addition to income tax. and I’m being a little rough here.000 on the second $100.000 on the second $100.000 in tax on the first $100.000 each year. This proprietor or partner will pay roughly $15.000 or $30. 2008 by Fast Easy Incorporation Kits web site . Again. To understand this benefit. In all three of these cases. and he or she will pay roughly $3.
This tax equals as much as 6. or S. while the bank account for a sole proprietorship or informal partnership may be free if you keep a large-enough balance. similarly. For example. 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 corporation probably sets the shareholder-employee’s wages to a low but reasonable level. making an owner a corporate employee results in a new. The bank may charge $10. or $434 per employee. And this tax return may cost anywhere from a few hundred dollars to a few thousand dollars annually. corporation.2% of the first $7.Things work differently if the corporation elects to be treated as a Subchapter S.000 a year but is operated as a sole proprietorship. extra payroll tax (the Federal Unemployment Tax). bump the prices they charge you. In this case. $20. This increase in administrative complexity adds to your costs and your work. As compared to the case where the same business makes $200.000 annually. an S corporation saves the shareholder-employee roughly $9. Copyright © 2007. 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. So an obvious question is “Why wouldn’t everyone become a corporation?” Perhaps predictably. 2008 by Fast Easy Incorporation Kits web site .000. For starters.000 annually. a corporation needs to file its own tax return. Increased Administrative Complexity… As a general rule. or $9. a corporation will probably increase your banking. a corporation increases the complexity and workload of administering your business. accounting and insurance costs. a partnership or a C corporation. the bank account for a corporation probably won’t be free. or even more each month. The accountant and insurance company may.000 an employer pays individual employees in wages. there are costs and headaches associated with incorporating. the employment tax equals 15% of only the $60. While a sole proprietorship or informal real estate partnership may be able to keep its bookkeeping and income tax return preparation very simple. Perhaps this means wages equal to $60. In this case.000 in wages. Related to this point.
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. 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. again. business cards. Finally. You will need to print new letterhead. tax laws do “say otherwise” in the typical cases of a sole proprietor or partnership incorporating the business. if a sole proprietor incorporates his or her business. Obviously. A Slightly Different Set of Tax Rules… I also want to briefly summarize here the rules about how corporations are taxed. no tax effect should occur merely because the partnership has become a corporation. the control requirement is met when a proprietor incorporates his or her business. Fortunately. For example. a corporation will mean that you need to have a board of directors (which will need to meet regularly such as monthly. such as where you’ve got a larger group of people who are Copyright © 2007. For example. And exchanges represent taxable events unless tax laws say otherwise. you may spend money on publications like this. And the control requirement is met when a partnership incorporates a partnership. in any situation that isn’t like one of the preceding examples. no tax effect should occur merely because the proprietorship has become a corporation. Obviously. 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. You’ll also need to keep good minutes of these meetings. You may buy the services of accountants and attorneys. if a partnership incorporates its business.A corporation may involve several hundred or even a few thousand dollars of startup expense. 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. Similarly. You may need to consult a tax practitioner. In other cases. however. I can’t summarize all of the tax law applicable to corporations in a few paragraphs. 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 . quarterly or annually) and annual stockholders meetings.
for example. a corporation counts income and deductions the same way that a sole proprietorship or partnership does.000 – taxed at 39% $335. suppose someone starts a corporation solely by contributing a fully depreciated truck and that there’s a bank loan on the truck equal to $10.000.000 – taxed at 34% $100. transferring liabilities as part of incorporation triggers taxes in two cases: Case #1: If. In this case. and the person contributing the property and transferring the liabilities will probably be taxed on the liabilities contributed. called C corporations. The mechanics of how this works are beyond the scope of this short discussion. 2008 by Fast Easy Incorporation Kits web site .001 to $10. But the effect is pretty easy to describe: The exchange in this case looks to the tax man like a sale. Corporation Income and Corporation Deductions As a generalization. For this reason. as part of the incorporation.000. Let me also make one other point about incorporating a business.000 – taxed at 34% Copyright © 2007. corporate income is taxed for federal tax purposes according to the following tax rate schedule: $0 to $50. the business needs to count that income in its accounting records.001 to $100. At the time I’m writing this. get taxed on their income. the transferred liabilities ($10. Anytime the corporation incurs or pays some expense that is ordinary and necessary for its business.000) exceed the basis of the property contributed ($0). How C Corporations Get Taxed Regular corporations. many small corporations attempt to extract all of the business profits in the form of salary.001 to $335. For example. Specifically. as part of incorporating a business. 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. the excess of the liabilities over the basis of the property gets counted as income or gain. that transfer of liabilities may trigger taxes.contributing property to the corporation in stages. Anytime the corporation earns or receives income. transfers liabilities to the corporation.001 to $75. The person contributing the truck gets taxed on the $10. If a sole proprietor or partnership incorporates a business and. the business can count that deduction in its accounting records.000 – taxed at 25% $75.000 – taxed at 15% $50. 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.000.
for example. Finally. If a corporation operates in multiple states.000 of profit is apportioned to Rhode Island and $50. $50. for example. For example. If you work out the math.000—based on the states in which the corporation sells its products or services.000.$10. which is also a Rhode Island corporation.000.000. the corporation pays $22.000 of profit is apportioned to each of these four states.) Note. In addition. Here’s a simple example of how this works.000 of profit is apportioned to Rhode Island and $50. and a 34% federal tax on the last $25.001 to $18.000—based on the payroll paid in the states where the business employs people. In this case.000 of profit.333.000.333. Suppose a corporation (and it doesn’t matter whether the corporation is a C corporation or an S corporation) makes $300. or $100. (The state also sets a $250 minimum corporate tax.750 in federal corporate income taxes on the first $100.333 – taxed at 38% Over $18. If the corporation makes half of its sales in Rhode Island and half in Washington.333 – taxed at 35% A corporation that makes $100. 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 of profit is apportioned to Washington. $25. based on the states in which the corporation owns property. pays a 15% federal tax on the first $50.000. Corporate dividends paid by a C corporation. The three-factor apportionment formula apportions one-third of the $300. a 25% federal tax on the next $25.000 – taxed at 35% $15. if the corporation’s payroll is evenly split between Nevada.000 of profit is apportioned to California. the corporation apportions its profit—usually using something called a three-factor formula. for example. Rhode Island levies a 9% state corporate tax. does business in other states that tax corporate profits. 2008 by Fast Easy Incorporation Kits web site .001 to $15. that a Rhode Island business. the apportionment formula apportions one third of the profit—the final $100. Suppose. too.000. Copyright © 2007. the business still owes those states income tax on its profits. if the corporation has half of its property in Rhode Island and half of its property in California. those shareholders pay tax on the dividend. generally get taxed at a 15% federal rate. then another $50. For example.000. for example. The apportionment formula apportions one third of the profit—another $100.000. that if the corporation pays a dividend to its shareholders out of its profits.000.000. Rhode Island and Oregon. California. of the profit.
On the other hand.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. After the previously taxed profits are exhausted and to the extent of any capital contributed to the corporation. But business owners need to understand that if a corporation owns property. In my opinion. 2008 by Fast Easy Incorporation Kits web site . 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 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. One final note: If. In essence. if the corporation distributes appreciated property (like real estate) to a shareholder. however. 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. the incorporation option is uneconomical for very small businesses. think that the limited liability company is often a better choice for small businesses than a corporation. You’ll need to carefully consider the benefits and costs as they add up in your specific situation. the corporation pays tax on the appreciation. the 2 Most business advisors. 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%). as part of stopping business. Stopping a Corporation If a corporation stops doing business. A limited liability company. 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. gives you all the same liability protection. me included. employs people. an additional Copyright © 2007. I will share these thoughts. or makes sales in a state. or LLC. and then distributing all of the cash that’s still left over to the shareholders. I can’t give you a one-size-fits-all answer. the corporation generally owes taxes to that state—either income taxes (which most states charge) or gross receipts taxes. For example. In these cases. a corporation distributes property rather than cash. a limited liability company is a “lite” version of a corporation. For example. paying off all of the corporation’s debts. the shareholders need to liquidate the corporation by selling all of the corporation’s assets. the shareholders pay regular dividend tax rates (usually 15%) on the money. To the extent that distributions made to shareholders come from previously taxed profits. the shareholders get tax-free returns of capital.
Enter your business or investment name onto the lines provided. or web page address. so I won’t bang the LLC drum again. That said.”) Incorporated.ri. (I used the example name.. Acme Explosives Corporation tax benefit (flexibility).us/corpsearch/corpsearchinput. for this form (see Figures 1 and 2) is as shown below. http://www. For example. but burdens you with less red tape. Copyright © 2007. Co. As an added bonus. 2. (Optional) Check if the corporation name you want is available.html6/ 3. The URL. Here’s what you do: 1. Limited. an S corporation can often save the owners thousands of dollars a year in income or payroll taxes. Acme Explosives Company Acme Explosives Co.ri. Acme Explosives Limited. Corporation. presumably you’ve already read this sort of comment from me before.sec..us/corps/fee%20schedule/newfee.state. As a first step. all of the following names should be acceptable: Acme Explosives Incorporated Acme Explosives Inc.corporation economically reduces business risk.. Company. Forming the Rhode Island Corporation The actual steps you take to form a Rhode Island state corporation are almost comically simple.state. “Acme Explosives LLC. Ltd. Identify the name you want to use for your new LLC. Acme Explosives Ltd. you may want to check if the corporation name you want to use is even available.asp You may reach the Corporations Division by telephone by calling (401) 222-3040. and then print this form. Corp. Download the Articles of Incorporation Form from the Rhode Island Corporation Forms web site. Inc. Or alternatively. 2008 by Fast Easy Incorporation Kits web site . The telephone lines are available from 8:30 am to 4:30 pm. a C corporation can often produce tax savings to the business owner because shareholder-employers can get tax-free fringe benefits. Here’s an easy and free way to do this: You can search for a similarly named corporation using the Rhode Island Department of State’s online database at: http://ucc.
Accordingly. he or she will probably happily provide a registered agent service along with the tax preparation services. Acme Explosives Corporation will not offer multiple classes or series’ of stocks and will simply offer 1000 shares of common stock. 2008 by Fast Easy Incorporation Kits web site . If you wish for the minimum par value amount to be more than one cent. Every resident agent must have a street address in this state for the service of process. enter your name and address information into section 3. In this example.” Note. 4. Note: If you do want or need someone else to be your registered agent. If more than one class or series of shares is to be authorized. that if you use a Rhode Island accountant or bookkeeper to do your tax returns.. rights and limitations of each class or series. 6. the articles must set forth the number of authorized shares of each class or series and a distinguishing designation for each class or series (e. but it’s really easiest and cheapest to just be your own registered agent. Shares with a stated par value cannot be issued or sold at a price less than the stated par value. Every business corporation must designate in its certificate of incorporation the number of shares which the corporation shall have the authority to issue. You can pay someone else to be this registered agent. 5. Section 5 states that the par value of your stocks will be one cent. If you have a specific ending date. then you will need to state this in Section 6.Acme Explosives Corp. Rhode Island wants to know the name and contact information for a real person within the state of Rhode Island whom can act as the contact person should the state have questions or concerns about a corporations operation. you can state this in Section 6.) and set forth the preferences. Name the number of shares your corporation will issue Shares represent ownership interest in the corporation. common. Determine if sections 4 and 5 are true for your corporation Section 4 states that you are engaging in a lawful business AND that your business has no particular ending date. “Rhode Island registered agents. preferred.g. etc. Copyright © 2007. Provide your name and address to the Secretary of State’s office. just Google on the phrase. too.
Add additional Information (optional) In the space provided or on a separate 8 ½ x 11.7. Figure 1: Page 1 of Rhode Island Articles of Incorporation document Copyright © 2007. This is an optional provision. white sheet you may state additional information you wish to be part of the articles. 2008 by Fast Easy Incorporation Kits web site .
Figure 2: Page 2 of Rhode Island Articles of Incorporation document Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site .
You need to issue stock to the shareholders contributing cash or property. River Street Providence. This date cannot be prior to. 9. The sample corporate by-laws do allow you to use uncertificated stock. mail the document. Issuing Stock. your corporation legally exists—you still need to perform three other startup tasks: 1. and a check for $230 to: State of Rhode Island and Providence Plantations Office of the Secretary of State Corporations Division 148 W. you are an incorporator. And especially in the case where you are setting up a one-shareholder corporation which you will own and operate. 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. 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. 2008 by Fast Easy Incorporation Kits web site . it takes several weeks to get your LLC certificate back from the Secretary of State’s office. You need to follow your corporate by-laws as to how this process works. this was left blank. Electing Directors and Officers After the secretary of state certifies your corporation—and at this point. but in general. List date List the specified effective date. uncertificated stock— in other words. RI 02904-2615 Processing lead times vary. As a generalization. stock for which you don’t issue stock certificates—is probably easiest. In this case. Tip: If you want to use stock certificates. Submit the corporation application After you complete the Articles of Incorporation document. however. or later than 30 days after. you will need to put your name and address as well as your signature on the form. Since Acme Explosives Corporation will become effective at filing. a copy of the document. you can use uncertificated stock. Copyright © 2007. 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. Therefore. 10. if it is later than the filing date. the filing date.8.
among other items. 3. also known as a Federal Tax Identification Number.gov/ 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. apply for business licenses. Until your EIN is added to the permanent records. or pass an IRS Taxpayer Identification Number matching program. for your new corporation. In addition. many cities also have business permit and license requirements. 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. Getting an EIN for Your New Corporation You will need to get an Employer Identification Number. your bank will probably also require the board of directors to approve setting up a bank account. 2008 by Fast Easy Incorporation Kits web site . secretary and so on. The Rhode Island Department of Business Regulation provides a web site that gives information about many (if not most) business licensing requirements: http://www. or EIN. Rhode Island requires a license for several of the businesses that operate in the state. An EIN. apply as soon as possible! Copyright © 2007. you want to do all this exactly right. and according to your corporate by-laws. vice president. Caution: The IRS takes up to two weeks to make your new EIN part of its permanent records. You need to hold a stockholders meeting to elect a board of directors in accordance with your corporate by-laws.2. you can't file an electronic return. On the other hand. and file any tax returns required for your corporation such as income tax returns and payroll tax returns. identifies your business entity and often allows you to do things like open a bank account.ri. you’ll want to identify and then acquire the necessary permits and licenses. the board elects officers to the roles of president. Accordingly. If you’ve set up an corporation for a business. Your board of directors needs to hold a board of directors meeting in which.dbr. At this initial board meeting. Licensing a Business in Rhode Island As you probably know if you’ve worked or run a business in Rhode Island. if you do need an EIN. make an electronic payment. if you’re incorporating principally to minimize your legal liability.
the IRS makes its online EIN application available according to this schedule: Monday . Eastern time Sunday 7:00 p. The online EIN application asks questions and you simply provide the answers by filling in the blanks and checking boxes and buttons. as well as tax reporting requirements. Eastern time Fortunately. Eastern time Saturday 6:00 a.www4. click the "Corporations" button. What's more. This step is very important because each type of legal and tax structure has different rules and regulations. At the time I'm writing this (spring of 2008). If your new corporation will be treated for tax purposes as an S corporation.m. click the "Corporations" button. also known as a C corporation. to 9:00 p. you also do not need special computer skills to complete the online EIN application.m. 2008 by Fast Easy Incorporation Kits web site .m. online EIN application. All you need to have is Internet access and a current Internet browser.m. If your new corporation will be treated for tax purposes as a regular corporation.Applying for a New EIN using the Online EIN Application The easiest way to get an EIN number is through the interview-style. to 12:30 a. Copyright © 2007.Friday 6:00 a.jsp Scroll to the bottom of the page and click the “Begin Application” button.irs. to 12:00 a. When the online EIN application says "You have chosen Corporations" and asks what type of corporation.m. The online EIN application is not available 24 hours a day.gov/modiein/individual/index.m. When the online EIN application says "You have chosen Corporations" and asks what type of corporation. Go to the IRS website. Here are the precise steps for completing the online EIN application: 1. Go to the IRS online EIN application web page to begin the EIN online application: https://sa2. 2. Identify the legal and tax structures of your business entity. click the "Corporations" button. click the "S Corporation" button. you do not need special software to complete the online EIN application.
Click “Continue” after you identify the type of primary member or principal officer. including name and Social Security or Individual Tax Identification Number. The IRS also wants information about the principal officer. You need to designate a contact person--or what the online EIN application calls a principal officer. Identify and describe a contact person of the corporation. you can click on it to see a definition in a new window. for example. do not place a period after that initial. the person may be able to first obtain an Individual Tax Identification Copyright © 2007. If a word or phrase appears blue and underlined. 3.Note: The IRS web site supplies definitions for most of the terms used in the online EIN application. 2008 by Fast Easy Incorporation Kits web site . State why you are requesting an EIN. explain why you are requesting an EIN. the online EIN application brings you to a page that explains your choice. 4. In a small corporation. you should identify a corporation officer (probably the president or treasurer) as the person the IRS should contact when it has questions. The IRS considers the contact person to be the individual or business responsible for tax matters. Click the “Continue” button. Clicking on these definitions will not halt the progress of your application. they send the letter to the corporation in care of the person. After you indicate what type of legal and tax structure you've chosen for the new entity. you will click the “Started a New Business” button. If the IRS sends a letter to the corporation. owner or general partner. if you use a middle initial. Don't use any punctuation other than a hyphen (-) and ampersand (&) in the name. Your choices are: § § § § § Started a New Business Hired Employees Banking Purposes Changed Type of Organization Purchased Active Business In general. For instance. Note: If the contact person is a nonresident alien and therefore doesn't have a Social Security Number. Go to the bottom of this page and click the “Continue” button. When prompted by the online EIN application.
However. If you do. 2008 by Fast Easy Incorporation Kits web site . you should verify that both of these bits of information are correct. Application for IRS Individual Taxpayer Identification Number form. 5. Provide the corporation's business location.e. This address must be a U. the state where the articles of organization or formation are filed. 6. Click the “Continue” button. suite numbers. When prompted. however. Again. LC. You will also be required to provide a phone number. A trade name or "doing business as" name is another name under which the business or individual operates. if any. the county and state where the corporation is located. and the corporation start date. the trade name (if any). Do not use any punctuation except for a hyphen or a back slash. PLLC. Provide legal and trade name information about your corporation. If you use a trade name. The final question on this page is whether you have an address different from the physical location where you wish to have your mail sent. the name may not contain an ending such as LLC.S. This is typically the same state as the corporation's physical address. or Inc. you will be taken to a page to provide that address. The name you provide as the legal name of your corporation should match the articles of organization or articles of incorporation.. When prompted by the online EIN application. Note: IRS systems only allow 35 characters on the street address line. If your address does not fit in 35 characters. etc). Corp. Copyright © 2007. identify the state where the articles of organization or articles of incorporation were filed. apartment numbers. please make sure you provide the most essential address information (i.Number by completing a Form W-7. address and may not be a PO box. The online EIN application automatically fills in the county and state based on the physical address previously entered. if necessary. 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. the online EIN application allows only two special punctuation characters: hyphen (-) and ampersand (&). You can also provide a trade name. you need to provide the name of the corporation. You need to provide a physical address of your corporation.
choose a category that best describes your business. If you choose “Other” you will be taken to a second page of options. Indicate whether the corporation is subject to special federal excise taxes. You can receive your EIN confirmation letter online or by mail. If none of the categories fit.adobe. 7. tobacco and firearms. 8. This is the date on which the entity began doing business or will begin doing business. This may take up to four weeks. you can click on that category for a further explanation. After you provide the corporation name. Click the “Continue” button. Then click the “Continue” button. again when prompted. the IRS will send it to the mailing address you provided. address and start date information. Use the pull-down menu to select a month and year. Note. that you will need to have the Adobe Reader program installed on your computer. If you aren’t sure what a category includes. the answer will be “No” to all four questions. Click the “Continue” button. State How You Would Like to Receive Your EIN Confirmation Letter. click on "Other" and then click the “Continue” button. Read the questions and answer them. Click the “Continue” button. the online EIN application asks a series of questions about vehicles. click on the “Other” button on this page and then type in what your corporation will do.com/products/acrobat/readstep2. quarterly federal excise tax returns. Copyright © 2007. though. If you choose to receive it online. This program can be downloaded for free from: http://www. When prompted. If none of these options fit.Finally. you will need to provide the corporation's start date. 9. If you choose to receive the letter by mail. For most people. State what your corporation does. and alcohol.html. 2008 by Fast Easy Incorporation Kits web site . you will be able to view the letter immediately and it will not be mailed to you. gambling.
Before calling for an EIN. call (800) 829-4933 and select EIN from the list of options in order to speak with an IRS employee. However. .10:00 p. If you forget your EIN number. Tell the assistor you received an EIN from the Internet but can't remember it. click the “Submit” button to receive your EIN.gov/pub/irs-pdf/fss4.gov/pub/irs-pdf/iss4. however. and then mail or fax the completed SS-4 to the appropriate address or fax number.m. Note: The unique prefixes 20 and 26 identify the EIN as a number issued via the Internet.pdf The web address for the SS-4 form instructions is: http://www.m. local time." from www.irs.gov. start a new application.pdf Applying for a New EIN by Telephone You can also obtain an EIN immediately by calling (800) 829-4933. online EIN application described in the preceding paragraphs. you can download a paper copy of the Form SS-4. you really should retrieve a copy of the SS-4 form and form instructions from the www. For example. the IRS also provides other procedures for obtaining an EIN. Verify Your Information. 2008 by Fast Easy Incorporation Kits web site . This process can take up to two minutes.10. Print the summary page and check the information for errors.gov web site and fill out the form as best you can before calling the number just given. complete it.irs. "Application for an Employer Identification Number. Then.irs. the web address for the SS-4 form is: http://www. If any of the information is incorrect. The last page of the online EIN application summarizes your information. Applying for a New EIN using the Paper SS-4 Form As mentioned. after you determine the information is correct. the easiest way to get an EIN number is through the interview-style. The hours of operation are 7:00 a. Monday through Friday.irs. At the time I'm writing this document. Copyright © 2007.
Download the election forms.Electing S Corporation Treatment for a Corporation A corporation may elect to be treated as a Subchapter S corporation. In order to become an S corporation. 4 You can get basic tax information on S corporations by visiting www. a corporation must meet certain eligibility requirements. Washington and Wisconsin) must consent to the S election.htm. To make the election to be treated as an S corporation. At the time I'm writing this. estates of U. and certain trusts and charities. (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). (1) all shareholders (and shareholder spouses residing in community property states like Arizona. Louisiana.fasteasyincorporationkits. 2008 by Fast Easy Incorporation Kits web site . you need to file the election by August 15.S.com and from the http://www. including pass-through of net operating losses.irs. the precise web address for the 2553 form is: 3 The IRS may allow you to make a late S election. To complete and file the IRS Form 2553. 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. and (sometimes) substantial payroll tax savings. Get the IRS 2553 form from the www.gov web site. follow these steps: 1. also known as an S corporation. If you want an S election to be effective as of January 1. you need to file the election by March 15. (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. 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). S corporations often save the small business owner significant amounts of federal corporation income tax and payroll taxes. Copyright © 2007. in other words. called a C corporation. citizens or permanent residents. S corporations offer their owners and shareholder-employees some wonderful tax planning opportunities. you file Form 2553 with the Internal Revenue Service within 75 days from the start of the year. Texas.3 Caution: I want to caution you one last time about making the S election: Before you elect. New Mexico.S.SCorporationsExplained. Enough said. and (4) shareholders must generally be either U. Idaho. citizens or permanent residents. You will want to contact them or a knowledgeable local tax practitioner for current information about any “late Subchapter S election procedures” procedure.com/taxationofcorporations. Nevada. many tax traps exist for the unwary and the careless. As compared to a regular corporation. California.4 However. In a nutshell. no federal corporate income tax.
pdf It's also not a bad idea. to also grab an up-to-date copy of the form instructions.gov/pub/irs-pdf/i2553.irs.gov/pub/irs-pdf/f2553.pdf Copyright © 2007.irs.http://www. The precise web address for the 2553 instructions at the time I'm writing this is: http://www. 2008 by Fast Easy Incorporation Kits web site . if you're going to grab an up-to-date copy of the form.
Copyright © 2007.Figure 3: Page 1 of an example completed 2553 Form. 2008 by Fast Easy Incorporation Kits web site .
Instead. 4. almost certainly want to mark the Calendar Year option in box F. 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. Copyright © 2007. You can also. the new S corporation may be subject to special taxes and also be subject to several accounting rules too complicated for a doit-yourselfer. Accordingly. 5. Provide the corporation’s name. city and state. October. 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.2. or on the last day of September. At the very top of the form (see Figure 3). 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). Typically. the street address. Note: In the area beneath box H. you should not do this using a do-it-yourself approach. in the block labeled “Type Or Print. Enter your name and telephone information into Box H. the effective date of the S election is the incorporation date. you probably. 2008 by Fast Easy Incorporation Kits web site . October or November—only complicates your tax accounting and produces no real benefit for you. or November. however. Note: If you think you want a non-calendar fiscal year end. 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. 3. You shouldn't need to use this space if you're filing the election on time. you shouldn’t make the S election yourself. 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. Tip: You can elect Subchapter S status for a corporation that’s previously operated as a regular C corporation. however. however. make an S election effective as of the start of the year (typically January 1). the IRS provides space for you to explain why you're filing a late 2553 election. Having a non-calendar fiscal year—an accounting year that ends in September. S corporation fiscal years can end on December 31. Specify that the S corporation’s tax year will end on December 31. and the employer identification number.” you enter the name of the corporation. Note. This tells the IRS who to call if they have questions about the S election. When corporations become S corporations after being a C corporation. You should confer with a knowledgeable tax practitioner. However. address. Enter the effective date of your S election into Box E.
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. On page 2 of the 2553 form (see Figure 4). is that you not try to file a late election yourself. Note that in the case of non-shareholder spouse. You need to enter each shareholder’s social security number into column M. Texas. you probably want to pay a lawyer. The IRS typically has special procedures for making these late elections. You need to provide each shareholder name and address in column J. Copyright © 2007. L. 6. However. enter the month and day that each shareholder’s tax year years. If you've already goofed up the S election deadline. and you want to have someone who understands the most current special procedures do the election. K.) As mentioned earlier in this ebook. you can enter those percentages into column L. Louisiana. Nevada. 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 needed. You need to have each shareholder sign and date the S election in column K. You must use column L to identify the number of shares that each shareholder holds. M. Finally. 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. by the way. Washington.My suggestion. California. Name and get signatures from each shareholder and. if any of your shareholders resides in a community property state (Arizona. Wisconsin and sometimes Alaska and Puerto Rico). 2008 by Fast Easy Incorporation Kits web site . certified public accountant or enrolled agent who specializes in S corporations to fix your election. If owners don’t hold shares but only percentage interests. New Mexico. Note: You won't need to worry about the third page of the 2553 form (see Figure 5). 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. Idaho. Sign the S election Form. (This should be December 31 in the case of most individuals. and N to name each shareholder in the new S corporation. use columns J. shareholder spouse. 7.
2008 by Fast Easy Incorporation Kits web site . 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.
District of Columbia. North Carolina. South Carolina. UT 84201 Fax: (801)-620-7116 Some Closing Caveats and Comments Before I end this short booklet. Arkansas. Iowa. North Dakota. Rhode Island. Pennsylvania. Especially with the IRS. Mississippi. Maryland. If your principal business. Missouri. New York. Montana. you can see which mailing address or fax number you can use for your state using the table below. Texas. Kentucky. New Hampshire. Tennessee. Copyright © 2007. South Dakota. Oregon. but nowadays. cross your fingers and then make a late election via mail if there's a deadline problem. 2008 by Fast Easy Incorporation Kits web site . Virginia. Vermont. Nebraska. West Virginia. Idaho. Colorado. Nevada. Utah. attempt to immediately resolve any problems by telephoning the Secretary of State’s office or the local IRS office. Fax or Mail the 2553 Form to make the federal S election. Washington. OH 45999 Fax: (859) 669-5748 Department of Treasury Internal Revenue Service Center Ogden. if you act immediately you can often still fix a problem before the election deadlines expire. Oklahoma. Arizona. New Mexico. Florida. I want to share a handful of quick comments: 1. Ohio. Certified mail with a delivery receipt isn't a bad idea. Maine. Wisconsin Alabama.8. the IRS is so forgiving about late S elections that it's probably just as easy to fax the completed 2553 form. In any case. Massachusetts. 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. Illinois. Delaware. Hawaii. 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 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. Louisiana. Kansas. office or agency address is located in state of: Connecticut. Wyoming Then use the following mailing address or fax number to submit 2553 Department of Treasury Internal Revenue Service Center Cincinnati. Minnesota. Indiana. Alaska. New Jersey. California. Georgia. I used to suggest that people mail the 2553 form using certified mail with a delivery receipt. Michigan.
7. For corporations that use a calendar year ending December 31. a regular C corporation can often have an accounting. Note that with good salary data.S.” year that ends on the last day of any month of the year. may often use a non-calendar year for their accounting. enlist the services of a local professional. say. for example. Something you should know now. 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. 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. 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. don’t waste time trying to fix a problem you don’t understand. Most of the time. 5. instead. if your corporation begins doing business in. I mentioned this before. 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. you should probably assume that the IRS will challenge an unreasonably low or high salary. S corporations may be able to use a non-calendar year. give up on the “do-it-yourself” approach and. If you can’t resolve the problems yourself. can be several thousand dollars a year. In fact. before you finish setting up your corporation: In general. Corporation tax returns for both C and S corporations are due 75 days after the end of the tax year. For example. But if you’re having trouble. C corporations. county and city government agencies. Don’t put assets that may appreciate (such as real estate) into a corporation without consulting a knowledgeable tax attorney or a CPA. Government’s Bureau of Labor Statistics.000 in payroll taxes. a smart person who’s careful can work through the paperwork themselves. Montana. Be aware that the IRS can challenge an unreasonably low salary paid to an S corporation shareholder-employee as well as an unreasonably high salary paid to a C corporation shareholder-employer. such as from the U. you will need a certified public accountant or enrolled agent to prepare a corporate tax return for your new corporation. you often can support a salary that allows you to save on taxes. 4. 3. 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. however. My strong suggestion to my clients is that they collect independent salary data to support what their S corporation pays shareholderemployees in wages. 6. In other words. 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. The “cost” of fouling up an S election. or “fiscal. Copyright © 2007. 2008 by Fast Easy Incorporation Kits web site . It’s truly foolish to save yourself $500 of attorneys’ fees but end up paying an extra $5.
2008 by Fast Easy Incorporation Kits web site .Appendix A Sample Corporate By-laws Copyright © 2007.
Annual Meetings. it will in addition state the purpose or purposes for which said meeting is called. for any purpose or purposes. and the business transacted at such meeting will be limited to the matters so stated in said notice and any matters reasonably related thereto. 2.1. Special meetings of the shareholders. Written notice of each shareholders meeting stating the place.m. will have power to adjourn the meeting from time to time. 2008 by Fast Easy Incorporation Kits web site . 2. 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. Such request of the Board or shareholders will state the purpose or purposes of the proposed meeting. until a quorum will be present or represented. 2. without notice other than announcement at 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. Offices. 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. the shareholders entitled to vote thereat. 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. 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. Annual meetings of shareholders will be held at 10:00 a.3. in addition to its registered office in the state in which it is incorporated. If. The presence at a shareholders meeting of the holders. present in person or represented by proxy. The Company may. Notices. 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. both within and without the state in which it is incorporated.Bylaws of ______________________________________________ Formed under the laws of the state of _______________________ (the “Company”) 1. 2. unless otherwise prescribed by 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 constitute a quorum at such meeting for the transaction of business except as otherwise provided by the articles of incorporation or law. If said notice is for a shareholders meeting other than an annual meeting. 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. such quorum will not be present or represented at any meeting of the shareholders. 2. Quorum. Special Meetings. however. Shareholder Meetings.4. have such other offices and places of business.2. At such reconvened meeting at which a quorum Copyright © 2007.
5. If any such adjournment is for more than 30 days. Votes Per Share. unless the question is one upon which. the articles of incorporation or law directed or required to be exercised or done by the shareholders. unless the proxy provides for a longer period. 2. at least ten days before every meeting of shareholders. 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.5. during ordinary business hours for a period of at least ten days prior to the meeting. 2008 by Fast Easy Incorporation Kits web site . Copyright © 2007. at the registered office of the Company. at any meeting of shareholders may be taken without a meeting. for any purpose germane to the meeting. 2. if a consent in writing. setting forth the action so taken. 2. Voting Lists. Proxies. The officer who has charge of the stock ledger of the Company will prepare.1. All directors will be elected by the shareholders at each annual shareholders meeting. Directors need not be shareholders or residents of the state in which the Company is incorporated. 3. When a quorum is present at any meeting.5.2. by express provision of the articles of incorporation or law. in which case such express provision will govern and control the decision of such question. or which may be taken. 2.1. 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. and may be inspected by any shareholder who is present. Any action required to be taken. 2. Voting of Shares. a new notice of said meeting will be given to each shareholder entitled to vote at such meeting. No proxy will be voted on after eleven months from its date. or if after the adjournment a new record date is fixed for the reconvened meeting. Unless otherwise provided in the articles of incorporation. 3. Purpose. Election. 3.5. 3. 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. Such list will be open to the examination of any shareholder. the vote of the holders. Number. present in person or represented by proxy. 2. any business may be transacted which might have been transacted at the meeting as originally notified.5. without prior notice and without a vote.4. The number of directors constituting the Board will never be less than one and will be determined by resolution of the Board. Plurality.3. Directors. a different vote is required.5.3.2. will be signed by all of the holders of outstanding stock entitled to vote thereon.will be present or represented. The list will also be produced and kept at the time and place of the meeting during the whole time thereof. The business of the Company will be managed by or under the direction of the Board. Consents in Lieu of Meeting.5. which may exercise all such power of the Company and do all such lawful acts and things as are not by these bylaws.
4. A director elected to fill a vacancy will be elected for the unexpired term of his predecessor. 3. 4. except as may be otherwise expressly provided by the articles of incorporation or law.6. 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. the directors present thereat may adjourn the meeting from time to time. The Board will meet as soon as practicable after the adjournment of each annual shareholders meeting. if any.4.3. Unless otherwise restricted by these bylaws or the articles of incorporation. any director or the entire Board may be removed.1. the Board will have the authority to fix the compensation of directors. 4. No more than two (b) newly-created directorships may be filled by the Board between any two (b) successive annual shareholders meetings. with or without cause. A majority of the directors will constitute a quorum for the transaction of business at any meeting 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. 2008 by Fast Easy Incorporation Kits web site .5. Members of committees of the Board may be allowed like compensation for attending committee meetings. Regular Meetings. 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. Annual Meeting. consent thereto in writing. 4. without notice other than announcement at the meeting.2. by a majority vote of the shares entitled to vote at an election of directors. Unless otherwise restricted by these bylaws or the articles of incorporation. Meetings of the Board. No notice to the directors will be necessary legally to convene this meeting. No such payment will preclude any director from serving the Company in any other capacity and receiving compensation therefore. Vacancies. Compensation. Special Meetings. Any director so elected by the Board will have a term terminating with the next election of one or more directors by the shareholders. though less than a quorum. provided a quorum is present. either personally or by mail or telegram. Consent in Lieu of Meeting. Vacancies in the Board may be filled by a majority vote of the remaining directors. Regularly scheduled. Quorum. Unless otherwise restricted by these bylaws or the articles of incorporation. Plurality. and the writing or writings are filed with the minutes of proceedings of the Board or committee. as the case may be. Special Meetings of the Board may be called by the president on one day’s notice to each director.5. if all members of the Board or committee. 4. 4.4. until a quorum is present. 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. If a quorum will not be present at any meeting. Copyright © 2007. 3.3. The directors may be reimbursed their expenses. 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.
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. 6.2. In the absence of the president or in the event of his inability or refusal to act. the articles of incorporation and law. will have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company. each committee to consist of one or more of the directors. then in the order of their election) will perform the duties of the president. The president will execute bonds. name or dissolve one or more committees. Unavailable Powers. and may authorize the seal of the Company to be affixed to all papers which may require it. Copyright © 2007. The Board will elect a president and a secretary (collectively. 5.1. amend or repeal any resolution of the Board which provides that it will not be so amendable or repealable.1. deeds of trust and other contracts requiring a seal under the seal of the Company. these bylaws or the articles of incorporation expressly so provide.5. recommend to the shareholders the sale. 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. 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. Vice Presidents. The Board may by resolution establish. 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. Each committee will keep regular minutes of its meetings and report the same to the Board when required.3. Committees of Directors.1. the “Required Officers”) having the respective duties enumerated below and may elect such other officers having the titles and duties set forth below which are not reserved for the Required Officers or such other titles and duties as the Board may by resolution from time to time establish: 6.3. 2008 by Fast Easy Incorporation Kits web site . lease or exchange of all or substantially all of the Company’s property and assets other than in the ordinary course of business.2. 6. 5. the president will preside at all meetings of the shareholders and the Board. Available Powers. cause the dissolution of the Company or a revocation of such a dissolution.1. the vice presidents in the order determined by the Board. amend the bylaws of the Company. the vice president (or in the event there be more than one vice president. 6. 5.1. Officers. In the absence of the chairman of the Board or in the event of his inability or refusal to act. adopt a plan of merger or consolidation. or. Any such committee. unless the resolution establishing such committee. 6. Establishment. Chairman of the Board. declare a dividend or authorize the issuance of stock. or if there be no such determination. Elected Officers. The president will be the chief executive officer of the Company. President. 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. No committee of the Board will have the power or authority to amend the articles of incorporation.1.
vouchers.1. in the absence of the secretary or in the event of his inability or refusal to act. the assistant treasurers in the order determined by the Board (or if there be no such determination. Any number of such offices may be held by the same person. will have all the powers of and be subject to all the restrictions upon the president. taking proper vouchers for such disbursements. may have a president. if there be more than one. Such divisional officers will be appointed by. report to and serve at the pleasure of the Board and such other officers that the Board Copyright © 2007. Divisional Officers. then in the order of their election or appointment) will. if there be more than one.7. He will disburse the funds of the Company as may be ordered by the Board. 2008 by Fast Easy Incorporation Kits web site . The assistant treasurer or. 6.4. and will render to the president or to the Board. Assistant Treasurers.1. Secretary.and when so acting. Assistant Secretaries.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. at its regular meetings. or cause to be given.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. 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. Treasurer.8. and when so affixed. an account of all his transactions as treasurer and of the financial condition of the Company. resignation. 6. retirement or removal from office of all books. 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. 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. The secretary will attend all meetings of the shareholders. if any. 6. assistant secretaries. 6. The assistant secretary or. 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. Each division of the Company. 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 vice presidents will perform such other duties and have such other powers as the Board or the president may from time to time prescribe. If required by the Board. secretary. 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. treasurer or controller and one or more vice presidents. money and other property of whatever kind in his possession or under his control belonging to the Company. or when the Board so requires. assistant treasurers and other assistant officers. the assistant secretaries in the order determined by the Board (or if there be no such determination. 6. papers. He will give.1. in the absence of the treasurer or in the event of his inability or refusal to act.1. it may be attested by his signature or by the signature of such assistant secretary. then in the order of their election or appointment) will.
7. to the extent allowed by law. preferences and relative. 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. 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. Officers. provided that the Required Officers and any other officer. prepared in accordance with applicable law. 6. retirement.1 for elected officers. as it will from time to time deem necessary. assistant officers and agents and may also remove such officers. such as the chairman of the Board. participating.2. and the titles and duties of such appointed officers may be as described in Section 6.3.4. routinely possessing authority over or responsibility for any functions of the Board must be directors. Every holder of the capital stock of the Company. unless the Board will by resolution provide that such class or series of stock will be uncertificated. possessing authority over or responsibility for any functions of the Board will be elected officers. in lieu of such statement.1. 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. where so authorized.5.may place in authority over them. unless these bylaws or the articles of incorporation otherwise provide. 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. certifying the number of shares owned by him. If the Company will be authorized to issue more than one class of capital stock or more than one series of any class. provided that. will be entitled to have a certificate. a statement of the powers. 6. limitations or restrictions of such preferences and/or rights will. 6. assistant officers and agents or delegate the power to do the same. optional or other special rights of each class of stock or series thereof and the qualifications. designations. Any number of offices may be held by the same person. Entitlement to Certificates. Shareholder and Director Officeholders. The Board will also fill any vacancy in an elected office. 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. Copyright © 2007. resignation or removal from office. Share Certificates. Officers need not be shareholders or residents of the state in which the Company is incorporated. 7. The salaries of elected officers will be set by the Board.2. and (b) the Company will furnish a copy of such statement without charge to each shareholder upon request therefore. Election. 2008 by Fast Easy Incorporation Kits web site . Multiple Classes of Stock. disqualification. such as the chairman of the Board. 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. 7. Vacancies. The Board may also appoint or delegate the power to appoint such other officers. Appointed Officers. Salaries. Multiple.
stolen or destroyed certificate or certificates. Registered Shareholders. When authorizing such issue of a new certificate or certificates. to receive payment of any dividend or other distribution or allotment of any rights. the certificate may be issued by the Company with the same effect as if such officer held such office on the date of issue. Upon surrender to the Company or to its transfer agent. or (b) a registrar other than the Company or any employee thereof.5. an assistant treasurer.3. in its discretion and as a condition precedent to the issuance thereof.7. require the owner of such lost. Fixing Record Date. 7. the Company will be obligated to issue a new certificate to the person entitled thereto.4. to exercise any rights in respect of any change. 2008 by Fast Easy Incorporation Kits web site . stolen or destroyed upon the making of an affidavit of that fact by the owner of the allegedly lost. 7. Transfer of Stock. Lost Certificates. which will not be more than 60 nor less than ten days prior to any such action. 7. the signatures of the officers of the Company may be facsimiles. the secretary or an assistant secretary of the Company. the president or any vice president. a record date. 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. 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 certificate or certificates. Signatures. 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. or the legal representative thereof. whether or not it will have express or other notice thereof. A record date validly fixed for any meeting of shareholders will be valid for any adjournment of said meeting and will. the Board may. 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. and (b) the treasurer. stolen or destroyed certificate or certificates. if any. 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. assignation or authority to transfer said shares and of the payment of all taxes applicable to the transfer of said shares. or his legal representative. be valid for any reconvenings and readjournments of said meeting made no later than 90 days after said record date. of a certificate for shares duly endorsed or accompanied by proper evidence of succession. Copyright © 2007.6. 7. 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. 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. the Board may fix. Where a certificate is countersigned by either (a) a transfer agent other than the Company or any employee thereof. except as otherwise required by law. in advance.7. conversion or exchange of stock or to effect any other lawful action. to express consent to corporate action in writing without a meeting. cancel the old certificate and record the transaction upon its books. at the Board’s election.
under these bylaws. Miscellaneous. return receipt requested. a full and clear statement of the business and condition of the Company. 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. Whenever any notice is required to be given under law. Place of Meetings. (b) deposit in the United States mail. Before payment of any dividend. Unless otherwise restricted by these bylaws. members of the Board. in its absolute discretion. 8.7. 8. if given pursuant to clause (a) of the previous sentence.1. Reports to Shareholders. may be declared by the Board at any meeting thereof. if given pursuant to clauses (b) or (c) of the previous sentence. prepaid. Dividends. 2008 by Fast Easy Incorporation Kits web site . The Board will present at each annual meeting of shareholders. or (3) when received. it will not be construed to mean personal 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. within or without the state in which the Company is incorporated.3.5. will be deemed equivalent to such required notice. Means of Giving Notice. the articles of incorporation or these bylaws. for equalizing dividends. Attendance Via Communications Equipment.4. Whenever. cable. Copyright © 2007.2. 8. return receipt requested.8. All shareholders and directors meetings will be held at such place or places. Reserves. signed before or after the date of such waiver by the person or persons entitled to said notice. (2) on the earlier of (i) the fourth day after deposit. the articles of incorporation or law. as will be designated from time to time by the Board and stated in the notices thereof. said meetings will be held at the registered office of the Company. (c) deposit with a recognized courier company. If no such place is so designated. 8. property or shares of capital stock and as may be limited by these bylaws.6. 8. telex or telegram transmission. prepaid. but such notice may be given by (a) personal delivery. and such participation in a meeting so held will constitute presence in person at the meeting. the articles of incorporation or law. 8. notice is required to be given to any person. Any such notice will be deemed to be received (1) when delivered. if given pursuant to clause (d) of the previous sentence. 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. Waiver of Notice. Dividends on the capital stock of the Company. paid in cash. or (ii) the time verification is made of delivery. and the Board may modify or abolish any such reserve in the manner in which it was created. the articles of incorporation or law applicable to the Company. 8. 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. a written waiver of such notice. and at any special meeting of shareholders when called for by vote of the shareholders. determines proper as a reserve or reserves to meet contingencies. or (d) facsimile.
affixed or otherwise reproduced. 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. END Copyright © 2007. These bylaws may be adopted.8. or at any special meeting of the shareholders or of the Board if notice of such adoption. 8. at any annual shareholders meeting or annual or regular meeting of the Board. Checks.9.8. 8. The fiscal year of the Company will be fixed by resolution of the Board. alteration.10. unless and to the extent the power of either is limited by the articles of incorporation. Amendments. The seal of the Company will be in such form as may from time to time be adopted by the Board. altered. amendment. 8. 2008 by Fast Easy Incorporation Kits web site .11. Seal. The seal may be used by causing it or a facsimile thereof to be impressed. amended. repeal or replacement is contained in the notice of such special meeting. repealed or replaced by the Board and by the shareholders. Fiscal Year.