Monday, August 8, 2016

Corporations & The Bcl

Forming a corporation can be a confusing and lengthy task.  Section 402 of the “Business Corporation” Law (BCL) generally requires that a “Certificate of Incorporation” be filed with the state.  An individual will likely need to serve the “Secretary of State” located in Albany to bring an action against your business.  Furthermore, the incorporator of the business must hold an “organization meeting” after the corporation comes into being.  Generally, directors are elected and by-laws are adopted during this meeting.  

A corporation has to remain aware of the BCL’s many requirements and the time limits for each.  For example, a business must keep certain records, such as the minutes, certain personally identifiable information of its shareholders, the types and amounts of shares held by shareholders, and dates pursuant to Section 624 of the BCL.  There must also be an annual shareholder meeting to elect directors and to conduct other business transactions.  The date of this meeting is typically fixed by the by-laws.    

Additionally, you must choose a name which is “distinguishable” from other active businesses in order for it to be accepted by the “Division of Corporations.”  An attorney can conduct a comprehensive search for you.  The “Corporation and Business Entity Database,” only has limited information, and therefore, a more in-depth investigation of business names is advised.  This will better ensure that your preferred name is currently available.  Furthermore, employing an attorney can reduce any wasted cost—fees are charged for each name you search.  An attorney can also help you obtain information regarding other businesses, such as a “limited liability partnership” (LLP). 

There are many benefits to business formation.  For example, since the members of the business are separate from the business entity itself, there is limited liability.  Typically, the duration of the business is unlimited, and interests in the business are transferable.  However, you are likely to owe annual franchise taxes even if your corporation does not engage in business or decreases in revenue.  These tax responsibilities will only cease upon dissolution of your business.  Seek the advice of a licensed attorney to help guide your business venture from start to finish.  

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