Corporations

Corporations

Although corporations may be subject to most formalities (takes about 4 hours per year to conform), they may be in many cases the simplest and least expensive entity to form, primarily because the parties need not negotiate an agreement amongst themselves about governing structure and operation of corporation, but may instead rely on the provisions of the General Corporations Law.

After formation directors must be elected by the shareholders or appointed by the initial incorporator, officers must be appointed by directors, bylaws must be prepared and adopted, and shares of stock issued to the shareholders. Within 90 days after fling articles of incorporation, a corporation must file with the Secretary of State a Statement of Domestic Stock Corporation. A corporation does not pay $800 franchise tax during its first year of operation. As for protecting your personal assets from liability for corporate acts, there is a big body of case law showing that a corporation complying with the state law offers excellent protection from personal liability. This is not yet the case with LLC’s.