How to Incorporate

by Diamond, Michael R.; Williams, Julie L.

• ISBN13: 9780471139133
• ISBN10: 0471139130
• Format: Paperback
• Copyright: 1996-03-01
• Publisher: John Wiley & Sons Inc

Summary

Everyone involved in a successful business eventually has to face the question of incorporation. The authors offer guidelines for structuring a corporation for maximum tax, legal, and business benefits, while avoiding the problems that befall corporations.

Table of Contents

Introduction	1	(3)
The Corporation	3	(10)
What Is a Corporation?	5	(1)
Corporate Structure	5	(2)
Profit and Nonprofit Corporations	7	(2)
Why Choose a Profit Corporation?	9	(2)
Disadvantages of a Profit Corporation	11	(2)
Choice of Form	13	(6)
Sole Proprietorship	13	(1)
General Partnership	14	(2)
Limited Partnership	16	(3)
Preincorporation Activities and Incorporation	19	(4)
Preincorporation Agreements	19	(2)
Preincorporation Share Subscriptions	21	(1)
Incorporation	22	(1)
Financial Structure	23	(12)
Debt Securities	23	(3)
Equity Securities	26	(4)
The Choice between Issuing Debt or Equity	30	(2)
Selling Securities	32	(3)
Dividends	35	(4)
Types of Dividends	35	(1)
Financial Considerations	36	(2)
Stock Splits	38	(1)
Considerations of Corporate Control	39	(12)
Shareholders	39	(7)
Directors	46	(2)
Officers	48	(3)
Articles of Incorporation	51	(12)
Heading	51	(1)
First Article---Name	52	(1)
Second Article---Duration	52	(1)
Third Article---Purpose	52	(1)
Fourth Article---Stock	53	(2)
Fifth Article---Classes of Shares	55	(2)
Sixth Article---Series of Classes	57	(1)
Seventh Article---Preemptive Rights	58	(1)
Eight Article---Special Provision	59	(1)
Ninth Article---Registered Office and Agent	60	(1)
Tenth Article---Board of Directors	60	(1)
Eleventh Article---Incorporators	61	(2)
Bylaws	63	(24)
Section One---Offices	64	(1)
Section Two---Shareholders	64	(5)
Section Three---Directors	69	(6)
Section Four---Officers	75	(4)
Section Five---Financial Matters	79	(1)
Section Six---Share Certificate	80	(2)
Section Seven---Fiscal Year	82	(1)
Section Eight---Corporate Seal	82	(1)
Section Nine---Notice Requirements	83	(1)
Section Ten---Procedures for Amendments	83	(1)
Section Eleven---Committees	84	(3)
Corporate Operations	87	(4)
Governmental Relations	88	(1)
Record Keeping	89	(1)
Piercing the Corporate Veil	90	(1)
Taxes	91	(6)
Federal Income Taxes	91	(3)
Tax Procedures	94	(3)
Subchapter s And Other Tax Options For A Small Business	97	(24)
Tax Drawbacks of Incorporation	97	(3)
Subchapter S Corporions	100	(6)
Eligibility Requirements for Subchapter S Status	106	(3)
Electing Subchapter S Status	109	(3)
Taxation of the S Corporation and Its Shareholders	112	(3)
Section 1244 Stock	115	(1)
Debt Financing	116	(2)
The Tax Reform Act of 1986	118	(3)
Limited Liability Companies	121	(20)
Creation of Limited Liability Companies	122	(12)
Tax Aspects of LLCs	134	(4)
Comparison with Other Business Forms	138	(2)
Conclusion	140	(1)
Taking Funds From The Corporation	141	(12)
Corporate Capitalization with Debt	142	(4)
Shareholder Leases to the Corporation	146	(2)
Acquisition by the Corporation of Goods and Services Available to the Shareholders	148	(5)
Executive Compensation	153	(20)
Salaries, Fees, and Bonuses	156	(2)
Health and Life Insurance	158	(2)
Qualification and Nondiscrimination Requirements	160	(2)
Other Fringe Benefits	162	(2)
Employee Benefit Plans	164	(9)
Securities	173	(135)
The 1933 Act: Registration and Exemption	174	(1)
The 1934 Act	175	(2)
APPENDIXES
1. Sample Preincorporation Agreement	177	(2)
2. Application for Reservation of Corporate Name	179	(2)
3. Articles of Incorporation (General)	181	(4)
4. Articles of Incorporation (California)	185	(2)
5. Certificate of Incorporation (Delaware)	187	(2)
6. Articles of Incorpoartion (washington, D.C.)	189	(4)
7. Articles of Incorporation (Maryland)	193	(2)
8. Certificate of Incorporation (New York)	195	(2)
9. Articles of Incorporation (Wisconsin)	197	(4)
10. Stock Certificate	201	(2)
11. Bylaws	203	(18)
12. Minutes of Organization Meeting of Board of Directors	221	(4)
13. Offer to Purchase Shares	225	(2)
14. Board Resolution Accepting Offer to Purchase Shares	227	(2)
15. Waiver of Notice of Annual Meeting of Shareholders	229	(2)
16. Proxy for Annual Meeting of Shareholders	231	(2)
17. Minutes of First Meeting of Shareholders	233	(2)
18. Shareholders' Agreement	235	(4)
19. Voting Trust Agreement	239	(4)
20. Comparison Chart---Model Act and State Statutes	243	(4)
21. Application for Employer Identification Number, Form SS-4	247	(2)
22. Instruction for Form SS-4	249	(4)
23. Election by a Small Business Corporation Form 2553	253	(4)
24. Instructions for Form 2553	257	(4)
25. Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004	261	(2)
26. U.S. Corporation Income Tax Return Form 1120	263	(6)
27. U.S. Corporation Short-Form Income Tax Return, Form 1120-A	269	(4)
28. U.S. Income Tax Return for an S Corporation Form 1120S	273	(6)
29. Schedule K-1 (Form 1120S), Shareholder's Share of Income, Credits, Deductions, Etc	279	(4)
30. Instructions for Schedule K-1 (Form 1120S)	283	(10)
31. Employer's Quarterly Federal Tax Return, Form 941	293	(4)
32. U.S. Partnership Return of Income, Form 1065	297	(4)
33. Schedule K (Form 1065), Partners' Shares of Income, Credits, Deductions, Etc.	301	(4)
34. Schedule K-1 (Form 1065), Partner's Share of Income Credits, Deductions, Etc.	305	(3)
Index	308