VO: Welcome to this evening’s broadcast of the Small Business Review sponsored by Inc Plan USA of Wilmington, Delaware; our host for this broadcast is the Editor of the Inc Plan Review Jacques Luben.Jacques Luben: Thank you, our special topic for today is “What are the key steps to properly maintaining my new corporation.” Forming a corporate entity provides immediate benefits to the successful business owner who wishes to protect his or her personal assets from business litigation. Proper planning the corporate structure can also provide substantial tax savings to the well prepared entrepreneur. As a result it is critical to maintain your company in proper standing after your corporation is created; this will allow you to fully derive all of the long term benefits that your company is entitled to. To discuss this matter further I have invited our special guest for this interview, Lisa Giness. Lisa brings 23 years of extensive business experience to her specialized tasks at Inc Plan USA. Every day Lisa helps the owners of new corporations learn more about how to keep their corporate paperwork in proper order. This evening we will cover some of the basic approaches that will keep your company in good shape, Lisa welcome to the show.
Lisa Giness: Thank you Jacques it’s a pleasure to be here.
Jacques Luben: Lisa why does that business owner need any documentation at all?
Lisa Giness: Well in essence Jacques when you form a corporation, you create an entity which is kind of a being in and of itself and you are the guardian of that entity and in order to act on it’s behalf the entity has to give you permission and that’s done via the board of directors and a variety of documents you prepare.
Jacques Luben: What are the annual responsibilities that the business owner has to keep documentation in proper order?
Lisa Giness: Once the business is set up, each year you should certainly have an annual meeting of the Board of Directors, which documents any new activities, so on and so forth. Additionally for any special circumstances that arise, you may wanna have resolutions or special meetings.
Jacques Luben: Where do you keep all of this paperwork?
Lisa Giness: Typically it’s recommended that you have a corporate minute book and in that minute book you keep your articles of incorporation, your stock certificates, your stock transfer register and all of the variety of documents that evidence the activities of the company.
Jacques Luben: Now if I as a business owner go out and borrow money from the bank, is the bank typically gonna ask me to show all of this paperwork?
Lisa Giness: They’ll typically ask for some portion of it depending on what their bylaws stipulate they require, but most certainly they’re going to want something from the company evidencing that the corporation or the LLC has authorized this transaction to take place.
Jacques Luben: In what other circumstances would I be called upon to show these documents?
Lisa Giness: Well typically any real estate purchase or equipment purchases, things like that, if you were buying company cars, more often than not, you know, when you go to do a corporate insurance plan or something like that, any major company is going to want some proof that you’re not just acting on your own; that you are representing the company in good faith.
Jacques Luben: Thank you so much, we’ll be right back.
VO: This broadcast of the Small Business Review is sponsored by Inc Plan USA, a Delaware based Service Company that helps entrepreneurs form corporations and other business structures in all 50 US states. We are proud to offer highly personalized services at competitive prices. Our clients who are located throughout the world can reach us in person or by phone, fax and internet. Inc Plan USA is headquartered in Delaware because this state is home to over half a million companies that operate throughout the world. We are proud to be online with the Delaware Secretary Estate, this normally allows us to form corporate entities while we are on the phone with our clients. In addition to our extensive incorporating services in 50 states, we also provide entrepreneurs with a wide selection of business products that are described on our website HYPERLINK "http://www.incplan.net" www.incplan.net, how phone number is 800 462 4633 or for international callers, 302 428 1200.
Jacques Luben: In order to maintain my corporation in a legal way in most states what would you say are the absolute rock bottom requirements?
Lisa Giness: Well of course at first you’re going to have the first annual meeting of the Board of Directors and at that time you’re going to elect all of your officers because you’re gonna designate how stock will be distributed. The responsibility of course of the officers and then you’re probably gonna need a bank resolution to open your business bank account and you’ll want to establish the bylaws of the corporation and then of course every state does require that you maintain these records on an annual basis. You don’t have to submit them to the state but you wanna keep them in your corporate minute book in case you need them.
Jacques Luben: So really what you’re saying is that one of the main reasons you want to maintain your records properly is simply that there are events that arise where someone will ask you to present those documents and they have to be prepared?
Lisa Giness: It’s very unlikely that you will never be asked for any of these things, almost always you’re going-- some level of these documents will be required.
Jacques Luben: So would you say that most business owners buy a corporate kit for that reason?
Lisa Giness: Typically yes and we highly recommend it because it is a good organizational tool and it keeps everything together for them.
Jacques Luben: Now if I’m being audited by the state or by the IRS or by the county, will these documents come into play?
Lisa Giness: It’s quite likely that they will Jack because again you’re acting on behalf of this being that is your company and if they’re auditing the company, it’s in your best interest to be able to evidence that the company asked you to do these things and gave you the authority to proceed.
Jacques Luben: Lisa if there’s a major change in the corporation, for example if some directors are appointed or resign, if the corporation decides to sell shares to an outsider, other circumstances that could arise, how does all of that translate into the corporate records?
Lisa Giness: Well again one of two ways, one would be that you would have a special meeting of the Board of Directors whereby those things are decided or you could do what’s called a resolution of the Board of Directors where they would appoint or resign or change or alter or issue whatever it is that’s transpiring.
Jacques Luben: So what you’re really saying is that this is a very dynamic process?
Lisa Giness: Absolutely.
Jacques Luben: Okay Lisa there’s been a lot of publicity lately about how popular limited liability companies are compared to standard corporations. In terms of the paperwork, we know that a regular corporation has share certificates and we also know that Limited Liability Company is a little bit different. Could you briefly tell us how each one operates?
Lisa Giness: In terms of the annual requirements of resolutions, minutes of meetings and so on are very, very similar if not identical. Instead of share certificates, limited liability companies have what’s called membership certificates and there can be any number of members and they’re issued just like share certificates are. Instead of having bylaws of a corporation, limited liability companies have what’s called an operating agreement. It has a little more detail than bylaws do and in some cases can be a little more imposing depending on the level of activity of the company.
Jacques Luben: Well this has been great, I think that we’ve touched on the surface of this, obviously we can’t get to the full depth of your knowledge but I think it’s important for listeners to know that if they have questions about how to maintain a corporation once they’ve established it; that they can contact you or some of the other people at Inc Plan to get more information.
Lisa Giness: We’ll be very happy to help them.
Jacques Luben: And again I wanna thank you for joining us this evening.
Lisa Giness: My pleasure.
VO: This program has been brought to you by Inc Plan USA of Wilmington, Delaware.
