A
Amendment: An addition, deletion or change
to the existing provisions of a corporation’s or LLC’s
articles of incorporation/organization.
Articles of Incorporation: The title of
the document that is filed with the state’s office
to form a corporation. This document contains the basic
information about the corporation such as the name of the
corporation, the number of shares the corporation is authorized
to issue, the registered agent’s name and address,
and the incorporator’s name and address.
Articles of Organization: The title of
the document that is filed with the state’s office
to form a LLC. This document contains the basic information
about the LLC such as the name of the LLC, member information,
the registered agent’s name and address, and the organizer’s
name and address.
Assumed Name: A name other than the corporation
or LLC's true name, that they may conduct business under.
Also referred to as a fictitious name, a trade name, or
a D/B/A name.
B
Board of Directors: The board of directors
are responsible for the general supervision of the corporation.
Directors are elected by the shareholders of the corporation.
Also, directors are responsible for appointing officers.
Business Corporation Act: The set of laws
and statutes in each state that pertain to corporations.
Bylaws: The rules and standards that govern
the operation of a corporation. Issues such as the director
and/or shareholder meetings are detailed in the bylaws.
The bylaws must be consistent with the state’s business
corporation act.
C
Certificate of Authority: The document
that enables a corporation to do business in a particular
state other than the corporation’s state of formation.
Commingle: The sharing of personal and
corporate assets. The most common instance of commingling
is using one bank account for personal and corporate purposes.
If found commingling, you may be held personally liable
for corporate actions.
Corporate Indicator: A corporate indicator,
sometimes called a corporate name ending, is a word or an
abbreviation of a word that indicates that the business
is a corporation or LLC. Examples of a corporate indicator
are Incorporated, Inc, Corporation, Corp or LLC.
Corporate Kit: A binder that contains essential
items for the routine maintenance and administration of
a corporation or LLC. Corporate kits include sample minutes
and bylaws, stock certificates, stock ledger, and a corporate
seal embosser.
Corporate Seal Embosser: A corporate seal
embosser is a device made to emboss certain information
onto documents. This information usually includes the company's
name, state and date of formation. Corporate seal embossers
are often required when opening business bank accounts and
distributing stock or membership certificates.
Corporation: A corporation is a legal entity
that separates a business owner from his or her business.
Corporations are formed at the state level and are subject
to that state’s Business Corporation Act.
D
D/B/A Name: A name other than the corporation
or LLC's true name, that they may conduct business under.
Also referred to as an assumed name, a trade name, or a
fictitious name.
Directors: The individuals who, acting
as a group known as the board of directors, manage the business
affairs of a corporation.
Dissolution: The procedure by which a corporation
concludes its activities and prepares to liquidate its assets
for the purpose of paying bills and creditors, and if funds
remain, make distributions to shareholders. Dissolution
can be voluntary, initiated by the corporation, or involuntary,
initiated by the state.
Dividend: A dividend is a distribution
of money or property by a corporation to its shareholder.
Dividends are paid out of the corporation's net profit.
If there is no profit, dividends cannot be paid.
E
Employer Identification Number: An Employer
Identification Number or EIN, sometimes referred to as a
Federal Tax Identification Number, is a number given to
your company by the federal government for taxation purposes.
You can not hire employees or open a bank account in your
company's name without obtaining an Employer Identification
Number. Think of it as a social security number for your
business.
F
Federal Tax Identification Number: A Federal
Tax Identification Number, sometimes referred to as an Employer
Identification Number, is a number given to your company
by the federal government for taxation purposes. You can
not hire employees or open a bank account in your company's
name without obtaining an Employer Identification Number.
Think of it as a social security number for your business.
Fictitious Name: A name other than the
corporation or LLC's true name, that they may conduct business
under. Also referred to as an assumed name, a trade name,
or a D/B/A name.
Foreign Corporation: A foreign corporation
is a corporation formed outside of the state in which it
does business. If Acme Gadgets, Inc. is formed in Florida,
it is a domestic corporation in Florida. If it does business
in any other state, it is a foreign corporation in that
state. Any corporation which does business in another state
is required to apply for a certificate of authority to do
business in that state.
G
H
I
Incorporation: The process of forming
a corporation under the laws and statutes of a specific
state.
Incorporator: The person who drafts and
signs the articles of incorporation. The incorporator may
be personally liable for any false statements listed in
the articles of incorporation.
Involuntary Dissolution: Dissolution forced
upon a corporation, usually by the state, rather than decided
upon by the corporation.
J
K
L
Limited Liability: The key benefit of
incorporation. Limited liability restricts the personal
liability of the shareholders to the amount paid for their
stock.
Limited Liability Company: A limited liability
company, commonly referred to as an LLC, is a legal entity
that is formed at the state level to separate a business
owner from his or her business. Limited liability companies
are generally intended to provide the limited liability
of corporations and the pass-through taxation of partnerships.
M
Manager(s): The individual(s) who may
be responsible for the administration and management of
the LLC. Specific duties of the managers may be detailed
in the LLC’s articles of organization or the operating
agreement. Managers are generally thought of as employees
of the LLC.
Member(s): The owner(s) of an LLC. Unless
the articles of organization or operating agreement say
otherwise, the management of an LLC is vested in its members
in proportion to their ownership interest in the company.
Member Interest: This represents the ownership
of the LLC. Corporations have stock and LLCs have member
interest.
Minutes: A written record of all actions
taken during any meetings of the board of directors and/or
shareholders. These records are stored in a corporate minutes
book that must be kept at the corporation’s principal
office.
N
No Par Value Shares: Shares that, according
to the articles of incorporation, do not have a par value.
These shares may be issued for any amount determined by
the board of directors.
Non-Profit Corporation: A non-profit corporation
generally exists for the purpose of carrying out some socially
useful objective. The non-profit corporation’s income
does not get distributed to members, officers and/or directors.
The money is used to further the socially useful purpose.
O
Officers: Officers are appointed by the
board of directors and are responsible for the daily operation
of the corporation. The titles and duties of each officer
are usually listed in the company’s bylaws. Common
officer titles are president, vice president, secretary,
and treasurer.
Operating Agreement: A contract among the
members of a LLC that governs the membership, management,
operation and distribution of any income of the company.
The operating agreement should be drafted directly after
the LLC becomes active.
Organizational Meeting: A meeting that
the initial directors of a corporation hold directly after
the filing of the incorporation documents to complete the
organization of the corporation.
Organizer: The person who drafts and signs
the articles of organization. The organizer may be personally
liable for any false statements listed in the articles of
organization.
P
Par Value: The face value assigned to
a share of stock. For example, if shares have a par value
of $1.00 per share, the shares must be sold for at least
$1.00. They may be sold for more but must be sold for at
least $1.00. If the stock is no par value, the directors
will set a price for the shares.
Pass-Through Taxation: A tax concept that
occurs with S-Corporations and LLCs. The gains or losses
of the company are passed through to the owners and taxed
at the personal level and not at the corporate level.
Piercing The Corporate Veil: A legal concept
sometimes used to impose personal liability on shareholders,
officers and/or directors for corporate acts. This permits
a court to disregard the shareholders, officers and/or directors
limited liability.
Professional Corporation: Professional
corporations are formed for professionals, such as doctors,
lawyers, architects, engineers, and accountants. Professional
corporation shareholders are personally liable to their
clients for any professional malpractice.
Q
R
Registered Agent: A person who is designated
in the articles of incorporation/organization that will
receive service of process or other important documents
from the state. All corporations and LLCs must choose a
person to act as their registered agent. There are no restrictions
regarding who can be a registered agent other than the person
must be located and available at a physical street address
within the state during normal business hours.
Registered Office: The physical street
address that the registered agent will be available at during
normal business hours.
S
S-Corporation: A federal election that
allows a corporation to be granted a special tax status
as specified under the Internal Revenue Code (IRC). S-Corporations
pay no income tax, rather all gains or losses of the corporation
pass through to the individual shareholders in proportion
to their holdings.
Service Of Process: The delivery of a legal
or court document. The person who receives the document
on behalf of a corporation or LLC, usually the registered
agent, is officially notified of a legal proceeding to which
the corporation or LLC is commanded to respond within a
certain amount of time.
Share: A share represents one unit of ownership
in a corporation.
Shareholders: The people who own the issued
stock of a corporation. Shareholders do not own specific
corporate property; they merely own an interest in the corporation.
Sole Proprietorship: A business that is
not incorporated. The owner of the sole proprietorship is
personally liable for all debts and any claims against the
business.
Stock: Stock represents the ownership of
a corporation and is often verified by a stock certificate.
Stock Certificate: A stock certificate
is a document the shows the amount of shares owned in a
corporation.
T
Tax-Exempt Organization: Any organization
that has been determined by the IRS to be exempt from federal
income taxation. The most common tax-exempt organization
is formed pursuant to the Internal Revenue Code, Section
501(c)(3). To obtain 501(c)(3) tax-exempt status the non-profit
corporation must be formed for religious, charitable, literary,
scientific or educational purposes.
Trade Name: A name other than the corporation
or LLC's true name, that they may conduct business under.
Also referred to as an assumed name, a fictitious name,
or a D/B/A name.
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