How to Incorporate: A Handbook for Entrepreneurs and Professionals, 4th Edition

by Michael R. Diamond (Georgetown Univ. Law Center); Julie L. Williams (Office of the Comptroller of the Currency)

• ISBN13: 9780471392576
• ISBN10: 047139257X
• Edition: 4th
• Format: Paperback
• Copyright: 2000-10-01
• Publisher: Wiley

Summary

The updated guide on how to get that little "Inc." after your business name, now in paperbackEveryone involved in a successful business eventually has to face the question of incorporation. This revised edition of one of the leading incorporation guidebooks will help you take your business to the next level. Michael Diamond and Julie Williams offer guidelines for structuring your corporation for maximum tax, legal, and business benefits, while avoiding the problems that befall corporations. Learn whether to use a standard incorporation or alternatives like subchapter "S" incorporation, partnerships, and proprietorships. This revised Fourth Edition includes new material on employment relationships and changes in laws regarding corporations and partnerships, and provides updated material on all relevant tax information.Michael R. Diamond (Washington, DC) is a professor of law at the American University School of Law. He has also been a practicing attorney in the corporate field with the law firm of O'Toole, Rothwell, Nassau and Steinbach. Julie L. Williams (Washington, DC) is a practicing attorney and the Senior Deputy General Counsel for the Office of Thrift Supervision

Author Biography

MICHAEL R. DIAMOND is an attorney and Senior Academic and Policy Fellow and Director of the Housing and Community Development Clinic at the Georgetown University Law Center where he teaches corporations. He has also been a practicing attorney in the corporate world with the law firm of O’Toole, Rothwell, Nassau and Steinbach.

Table of Contents

Introduction	1	(2)
The Corporation	3	(10)
What Is a Corporation?	3	(2)
Corporate Structure	5	(2)
Profit and Nonprofit Corporations	7	(2)
Why Choose a For-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	(6)
Preincorporation Agreements	19	(2)
Preincorporation Share Subscriptions	21	(1)
Incorporation	22	(3)
Financial Structure	25	(12)
Debt Securities	25	(3)
Equity Securities	28	(4)
The Choice between Issuing Debt or Equity	32	(2)
Selling Securities	34	(3)
Dividends	37	(4)
Types of Dividends	37	(1)
Financial Considerations	38	(2)
Stock Splits	40	(1)
Considerations of Corporate Control	41	(12)
Shareholders	41	(9)
Directors	50	(2)
Officers	52	(1)
Articles of Incorporation	53	(12)
Heading	53	(1)
Name	54	(1)
Duration	54	(1)
Purpose	54	(1)
Stock	55	(2)
Classes of Shares	57	(2)
Series of Classes	59	(1)
Preemptive Rights	60	(1)
Speical Provisions	61	(1)
Registered Office and Agent	62	(1)
Board of Directors	63	(1)
Incorporators	63	(2)
Bylaws	65	(24)
Offices	66	(1)
Shareholders	66	(5)
Directors	71	(6)
Officers	77	(4)
Financial Matters	81	(1)
Share Certificate	82	(2)
Fiscal Year	84	(1)
Corporate Seal	84	(1)
Notice Requirements	84	(1)
Procedures for Amendments	85	(1)
Committees	85	(4)
Corporate Operations	89	(16)
Fiduciary Duties	90	(6)
Employment	96	(5)
Governmental Relations	101	(1)
Record Keeping	102	(1)
Piercing the Corporate Veil	103	(2)
Taxes	105	(14)
Federal Income Taxes	105	(3)
Tax Procedures	108	(2)
Deductions and Other Write-Offs	110	(4)
Tax Treatment of Losses	114	(5)
Subchapter S and Other Tax Options For A Small Business	119	(28)
Tax Drawbacks of Incorporation	119	(3)
Subchapter S Corporations	122	(6)
Eligibility Requirements for Subchapter S Status	128	(4)
Electing Subchapter S Status	132	(4)
Taxation of the S Corporation and Its Shareholders	136	(4)
Section 1244 Stock	140	(1)
Debt Financing	141	(1)
The Tax Reform Act of 1986	142	(5)
Limited Liability Companies	147	(20)
Creation of Limited Liability Companies	148	(12)
Tax Aspects of LLCs	160	(1)
Check the Box Regulations	160	(3)
Comparison with Other Business Forms	163	(2)
Conclusion	165	(2)
Taking Funds From The Corporation	167	(12)
Corporate Capitalization with Debt	168	(4)
Shareholder Leases to the Corporation	172	(2)
Acquisition by the Corporation of Goods and Services Available to the Shareholders	174	(5)
Executive Compensation	179	(20)
Salaries, Fees, and Bonuses	182	(2)
Health and Life Insurance	184	(2)
Qualification and Nondiscrimination Requirements	186	(2)
Other Fringe Benefits	188	(2)
Employee Benefit Plans	190	(1)
General Qualification Requirements	190	(9)
Securities	199	(152)
Federal Securities Laws	200	(5)
Initial Public Offerings	205	(1)
Mergers	206	(3)
APPENDIXES
1. Sample Preincorporation Agreement	209	(2)
2. Application for Reservation of Corporate Name	211	(2)
3. Articles of Incorporation (General)	213	(4)
4. Articles of Incorporation (California)	217	(2)
5. Certificate of Incorporation (Delaware)	219	(2)
6. Articles of Incorporation (Washington, D.C.)	221	(4)
7. Articles of Incorporation (Maryland)	225	(2)
8. Certificate of Incorporation (New York)	227	(2)
9. Articles of Incorporation (Wisconsin)	229	(4)
10. Stock Certificate	233	(2)
11. Bylaws	235	(18)
12. Minutes of Organization Meeting of Board of Directors	253	(4)
13. Offer to Purchase Shares	257	(2)
14. Board Resolution Accepting Offer to Purchase Shares	259	(2)
15. Waiver of Notice of Annual Meeting of Shareholders	261	(2)
16. Proxy for Annual Meeting of Shareholders	263	(2)
17. Minutes of Meeting of Shareholders	265	(2)
18. Shareholders' Agreement	267	(4)
19. Voting Trust Agreement	271	(4)
20. Comparison Chart - Model Act and State Statutes	275	(4)
21. Application for Employer Identification Number Form SS-4	279	(2)
22. Instructions for Form SS-4	281	(4)
23. Election by a Small Business Corporation, Form 2553	285	(4)
24. Instructions for Form 2553	289	(4)
24A. Entity Classification Election, Form 8832	293	(2)
24B. General Instructions for Form 8832	295	(4)
25. Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004	299	(4)
26. U.S. Corporation Income Tax Return Form 1120	303	(6)
27. U.S. Corporation Short-Form Income Tax Return, Form 1120-A	309	(4)
28. U.S. Income Tax Return for an S Corporation, Form 1120S	313	(6)
29. Schedule K-1 (Form 1120S), Shareholder's Share of Income, Credits, Deductions, Etc.	319	(4)
30. Instructions for Schedule K-1 (Form 1120S)	323	(10)
31. Employer's Quarterly Federal Tax Return, Form 941	333	(6)
32. U.S. Partnership Return of Income, Form 1065	339	(4)
33. Schedule K (Form 1065), Partners' Share of Income, Credits, Deductions, Etc.	343	(4)
34. Schedule K-1 (Form 1065) Partner's Share of Income, Credits, Deductions, Etc.	347	(4)
Index	351