Making A Corporation: An Overview
In very simple terms, a corporation can be explained as a form of business entity. Every form of business entity comprises related rights, duties and processes to make its functioning smooth. It is a separate entity and its identity is different from the people making a corporation . It is not a living being but has similar rights as a person. It is allowed to own property, claim constitutional rights and enter contracts just like a normal person. The lifespan is as long as 100 and 200 years and is even supposed to pay taxes.
Here are the steps to making a corporation:
1. The first and the foremost step involved in making a corporation is to give it an identity. You should give a name to your corporation so that it can easily be recognized.
2. After you give it a name, you are bound to go through a number of legal procedures. The corporation that is formed must be registered by the state, national government or province and are regulated by the laws passed by the government.
3. In general, the corporation is supposed to file articles of incorporation with government in which it lays out it's nature, the amount of stock it can issue and the names and address details of it's directors. As soon as the articles are approved, the directors of the corporation meet for the creation of bylaws. These laws govern the internal functions such as meetings and officer positions.
4. Once your corporation is registered in the state, the most important aspect to consider is the funding of the corporation. 5. Funding involves a serious discussion on capitalization like how to go about it and does it involve any risks. The points worth noting are that the state sets certain rules in relation to capitalization. Be aware of your status to incorporate them. These rules cover issues such as the minimum cash to be contributed, the ratios of debt and equity etc. 6. The method to capitalize the corporation is done by the sale of shares. A part of the shares are sold to the shareholders. The capitalization of a corporation is a tax issue and it is often recommended to fund it through loans.
The other steps in making a corporation include the possession of certain documents such as the incorporation articles submitted, resolutions of shareholders, directors' resolutions, security and share transfer register, and a copy of forms filed etc. The next step is to organize the corporation, which is done by written resolutions signed by the directors or shareholders. You must also get other permits and licenses for the corporation like a federal business number, non-corporate names, a provincial sales tax account and provincial and municipal licenses. While making a corporation, the golden tip is: follow the steps so that legal hassles can be avoided.
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