Business Formation

Some advantages are: you have limited liability; there are easy ways to transfer ownership; there is a perpetual life and the corporation has the ability to raise capital through the issuance of stock. Some disadvantages include: there is a double taxation of profits; the entity is subject to various state and federal restrictions; and a corporate charter may restrict the types of business activities. Speak to your local CPA to determine the best entity choice to fit your needs.

Simply stated, a S Corporation is taxed in the same manner as a partnership and is not taxed at the federal level. The income or losses and expenses flow through to the shareholders. A "C" Corporation pays tax on its profits, and if the owner shareholders take profits from the corporation, the distributions take the form of taxable dividends. In effect, this is a double taxation of profits. There are advantages and disadvantages to both S Corporations and Regular C Corporations. Speak to your local CPA about the tax strategies of selecting the type of entity for your business.

Yes. If you use a car entirely for business the cost of leasing is deductible. You cannot depreciate a car you lease. You can choose to deduct the standard mileage rate in lieu of actual expenses including lease payments.

Yes. As of 12/31/10 the ban on using the standard mileage rate on auto's used for hire such as a taxi was lifted. ,br> The standard mileage allowance for business use of a auto (including taxi's) in 2013 is 56.5 cents per mile for business miles driven.

Yes. The IRS has developed a web site to help small business and self-employed persons at www.irs.gov/businesses/small/index.html.

Most jurisdictions require that the corporation designate a registered agent for Service of Process. Generally, anyone who has a street address within the state of incorporation may act as a registered agent for the corporation. PO Boxes are not allowed to be used for a registered Agent. Most tax notices are sent to the Registered agent.

Most jurisdictions allow the same person to act in different capacities. Generally, There are up to 6 officers. President, Vice President, Treasurer, Secretary or clerk, Assistant Secretary, Assistant Treasurer.
Although most jurisdictions allow one person to serve in all capacities, the person's responsibility and authority changes through the different officer ships the person assumes.
The President is typically responsible for entering into contracts on behalf of the corporation, the Treasurer is responsible for maintaining and accounting for corporate funds, and the Secretary is responsible for observing corporate formalities and maintaining corporate records. In addition to these required officer positions, a corporation may also have vice presidents and assistant secretaries or assistant treasurers.
Generally, the authority and responsibilities of each officer is described in the corporate bylaws and may be further defined by an employment contract or job description.
The President has the overall executive responsibility for the management of the corporation and is directly responsible for carrying out the orders of the board of directors. He or she is usually elected by the board of directors.
The Treasurer is the chief financial officer of the corporation and is responsible for controlling and recording its finances and maintaining corporate bank accounts.
Actual fiscal policy of the corporation may rest with the Board of Directors and be largely controlled by the president on a day to day basis. The Secretary is typically responsible for maintaining the corporate records.

The Board of Directors is essentially the management body for the corporation. Responsibilities of the Board of Directors include establishing all business policies and approving major contracts and undertakings. The Board may also elect the President. Ordinary business practices of the corporation are carried out by the Officers and employees under the directives and supervision of these Directors. The Directors must act collectively for their votes and decisions to be valid. That is why Directors may only act at a Board of Directors meeting. The meeting requires certain formalities. One such formality is that the Directors must all be notified of the upcoming meeting in a prescribed manner. This can be waived or provided for in the corporation's Articles of Incorporation or Bylaws. For a Directors' meeting to be valid, there must also be a Quorum of Directors present. A Quorum is usually a majority of the Directors then serving on the Board. The Bylaws may specify another minimum number or percentage. The Board of Directors must meet on a regular basis, usually monthly or quarterly, but in no case less than annually. These are the regular Board meetings. The Board may also call Special Meetings for matters that may arise. Boards may call a special shareholders' meeting by adopting a resolution stating where and when the meeting is to be held and what business is to be transacted. The first meeting of the Board of Directors is important because the Bylaws, the Corporate Seal, Stock Certificates and Record Books are adopted. Board members, like officers, have a fiduciary duty to act in the best interests of the corporation and cannot put their own interests ahead of the corporation's. The Board must also act prudently and not negligently manage the affairs of the corporation. The Board must make certain that it properly exercises its authority in managing the corporation and does not abrogate its responsibilities to others. This means that the board must be very careful to document that each Board action was reasonable, lawful and in the best interests of the corporation. The record or Corporate Minutes of the meeting must include the discussions or statements to support the Board action and must detail why the action was proper.

Shares of stock represent ownership of a corporation. When no shares are issued, no individual(s) owns the corporation. Therefore, shares must be issued to those individuals who will own the corporation. Most states have created many exceptions and exemptions from registering a stock issuance with the State or with the Securities and Exchange Commission for most small businesses, it is recommended to contact the appropriate entity to determine whether you must file a notice of stock issuance on a state or Federal Level.