What is a corporation?
A corporation is an independent legal entity that is owned and controlled by shareholders. Except for very limited circumstances, the corporation itself, and not the shareholders, is held legally liable for the actions of the business and the debts it incurs.
Do I need a lawyer to incorporate?
It is possible to incorporate your business without an attorney, as there are many websites and “DIY” books that can explain the incorporation process. However, an experienced attorney is the only one who can provide sound legal advice that is tailored to your specific needs and business goals. Even at the most basic level, you will greatly benefit from the guidance of a corporate attorney as you set up your corporation, understand your tax obligations, negotiate or contract with third parties, hire employees, raise capital, and protect any intellectual property.
The experienced Virginia corporate attorneys at MartinWren, P.C. are able to guide your business through the incorporation process and help you establish a firm foundation to ensure your business’s continued success.
Why should I incorporate?
The primary benefit of incorporating is to limit your personal liability. Generally, shareholders are not liable or responsible for the debts or obligations of the corporation. So, if the corporation defaults on a loan or debt, unless you have personally signed for it, your personal assets will not be in jeopardy. Additionally, a corporation’s existence is not dependent on its shareholders. If a shareholder dies or leaves the corporation, it can continue to exist and do business. There are many other advantages to incorporating your business including the ability to raise capital through the sale of stock, the ease of ownership transfer, its centralized management, and its effect on qualified retirement plans and retirement funds.
If you are interested in incorporating your business, it is very helpful to consult with an experienced Virginia corporate attorney. Drawing from their years of experience, the Virginia corporate attorneys at MartinWren, P.C. can explain the process, listen to your business goals, and advise you on the best steps to take in order to set your business up for continued success.
What is a limited liability company (LLC) ?
An LLC is a limited liability company. It is a hybrid type of legal structure that combines the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership. Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses “pass through” the business to each owner (or “member”) of the company. LLC members report profits and losses on their personal income tax returns.
What are the advantages of a limited liability company (LLC)?
Similar to a corporation, members of a limited liability company are protected from personal liability for the actions and debts of the business. This means that generally members’ personal assets are exempt from business debts or liabilities.
One of the greatest advantages of an LLC is its operational ease. There is less startup cost and less registration paperwork that is required.
Additionally, there are fewer restrictions on profit sharing within an LLC and members are able to distribute profits as they see fit. It is also up to the members to determine how proportions of capital and time investment that are made by each member. The precise allocation of profits and losses, then, is decided by the members themselves.
How many directors or shareholders do I need?
Legally, you are only required to have one person who can act as a shareholder, director, and other officer roles. Virginia requires that you must have one or more directors on your board. But, depending on the nature of your business and the complexity of its operation, other people may be necessary to help the business operations run smoothly and the management needs be handled effectively.
An experienced corporate law attorney can guide you in structuring your shareholders or directors to ensure your business’s continued success.
What are corporate bylaws?
Bylaws govern a corporation. It is an internal document, created by the corporation, that specifies the overall policies of the business. Corporate bylaws will outline powers, roles, the rights and obligations of shareholders, and other operational policies.
It is extremely helpful to seek the advice of an experienced corporate law attorney when drafting your corporation’s bylaws. Starting your business with thorough and clear bylaws can provide a firm foundation for the building of the corporation.
Does our corporation need to have formal board of directors’ meetings?
There are many corporate formalities that are important to observe in order to comply with applicable Virginia law and ensure your corporation offers the most in liability protection. Corporate formalities must be observed to clearly separate your personal and business lives. You should be aware of a number of “do’s and don’ts” in order to ensure your corporation operates separately from your personal affairs.
Additionally, Virginia law mandates certain corporate formalities including annual shareholder meetings, the recording of minutes, maintaining a registered agent, filing an annual report, and, of course, paying taxes.
A skilled Virginia corporate law attorney can explain the exact formalities that should be followed by your corporation. If your business operations are ever challenged, it is critical that these formalities were impeccably followed so that the corporate shield is not disregarded and shareholders found personally liable for the company’s actions or debts.