Business Formation

Some advantages are: it has minimum legal restrictions; and is easy to discontinue. Some disadvantages are: unlimited liability; your income tax cannot be deferred by retaining profits; and you may not bring in new owners or outside capital contributions. Speak to your local CPA to determine the best entity choice for your needs.

A limited liability company, like a corporation, is set up and created under state law. Its owners are referred to as members. The entity gives its members the best of both worlds - Corporate liability protection with the advantages of partnership taxation. Forming a limited liability company is more expensive than forming a corporation and may not be necessary for your situation. Speak to your local CPA in detail to determine if forming or changing your entity status to a limited liability company is the correct choice for you.

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.

Individuals and unincorporated entities (sole proprietorships)that regularly conduct business using an assumed name often referred to as a dba must file an assumed name certificate with the county clerk in each county in which business premises are maintained. If corporations, limited liability companies or limited partnerships, entities created by filing with the secretary of state, do business with a name that is different than the name set forth in the organizational documents, they must file assumed name certificates in the county or counties where the registered office and the principal office are located, and must also file with the secretary of state.

A business corporation must sell shares of stock in order to capitalize the corporation. Capitalize provides the corporation with its own capital, separate from the money of its owners. This separation provides part of the support for shielding the shareholders from personal liability for the debts and obligations of the corporation. Shares of stock sold by the corporation represent proportionate ownership interests held by shareholders in the corporation. Par Value is a dollar value assigned to shares of stock which is the minimum amount for which each share may be sold. There is no minimum or maximum value that must be assigned. Shares may also have No Par Value, which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued. There is no minimum number of shares that must be authorized in the articles of incorporation. One or more shares may be authorized. The corporation may not sell more shares than it is authorized to issue and it must receive consideration in exchange for its shares.

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.

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.