Corporation

A corporation is a form of fictitious entity that allows the investors, executive, and agents not to be personally liable for corporate debt (in most instances). Under the Internal Revenue Code, an “S corporation” can often elect that the stockholders pay income tax on profits, not the entity itself. The S corporation is well-recognized and the laws governing it are clear, however, it does require a certain amount of administrative paperwork be maintained to satisfy its existence. The corporation is owned through stock, which can be readily transferred and is subject to state and federal securities laws. A corporation must have a registered agent in the state of incorporation and in each state where it’s authorized to do business.

To maintain recognition of the entity, you must pay annual or semiannual filing fees to the state of incorporation and any other states where "doing business", you must maintain corporate records including minutes of meetings of members in accord with the corporation bylaws, which governs the operations of the corporation, you must never co-mingle corporate funds with your personal funds, e.g., never use the corporate check account to pay for personal expenses. The corporation should be adequately capitalized also. If you do not keep these points in order, a court may not recognize the existence of the entity and hold the stockholders or directors or executives personally liable for company debt. This is called piercing the corporate veil. Also, when entering into any contract, make sure that the corporate agent signs on behalf of the corporation rather than personally.

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