HOW TO…Keep Your Corporation Current
□ Hold the initial directors' meeting to adopt bylaws and appoint officers.
□ Keep the state informed if your registered agent moves or changes.
□ File your initial and annual reports where required.
□ Hold your required annual meetings and document the decisions made at the meetings in the minutes.
Shareholders have no liability for corporate debts and lawsuits. Officers and directors have no personal liability for their corporate acts. Management of the corporation is vested in a board of directors that is elected by the shareholders. The board of directors appoints the principal officers of the corporation. Unlike a partnership or an LLC, in which an extensive agreement must be drafted that defines the rights and liabilities of the parties, the board of directors adopt bylaws for the corporation that are based primarily upon state corporate statutes that spell out the rights and liabilities of the shareholders, officers, and directors. Unlike a sole proprietorship, a corporation may enter into contracts and own property in its own name, and capital may be raised by selling stock or taking on debt. The existence of a corporation is usually perpetual and it is easy to transfer ownership upon death.
The start-up costs for forming a corporation are generally lower than forming a partnership or LLC, because of the necessary drafting of a limited partnership agreement or LLC operating agreement. There are usually greater maintenance costs, however, because a corporation has statutory reporting and corporate formality requirements.
Whether you are operating an S or a C corporation, most states require that you file an initial report within thirty to ninety days of formation of the corporation, updating the contact information for the company, its registered agent, officers, and directors. All states require corporations to file some type of annual report updating the same information.
Required corporate formalities include adopting bylaws, holding annual meetings for the directors and shareholders of the corporation, electing directors, appointing officers, drafting resolutions to authorize corporate actions, keeping accurate minutes of meetings, maintaining corporate records, maintaining a registered agent, and paying taxes.
If a corporation does not file the required reports or follow the required corporate formalities, it risks losing its corporate charter.
