As the director of a corporation, you have a host of responsibilities to tend to, and legal procedures are just one of them. Before you get too focused on the standard day to day activities of your business, learn more about the legal formalities for which you’re responsible in order that you can always ensure you’re compliant and up to date.
Federal and State Tax Identification Numbers
Getting a federal and state tax identification numbers is one of the first things you’ll want to do once you’ve established your corporation. Also known as an Employer Identification Number, you can apply for one by using your Taxpayer Identification Number, which you can do online through the IRS website. Going forward, you’ll use this number for tax administration.
File All Necessary Tax Returns
While you might not have even made your first dollar, you and any other directors of your corporation should establish a plan for paying your taxes. It’s much better to get an early idea of your tax liabilities, responsibilities and how you can structure your business in a way that best benefits your bottom line while remaining within legal bounds. Secure the services of a licensed and trusted accountant who has experience with corporations in your industry.
Issue Shares of Stock
If you’ve never been the director of a corporation, know that issuing stock can be an effective way to raise money, which you might prefer more than a traditional bank loan. If you do issue stocks, be sure you do so in a way that’s compliant with securities law and the articles of incorporation.
Properly Maintain Corporate Books and Records
This is another area where being proactive is your best option. Your accounting ledgers, corporate minute books, shareholder records and all other corporate records should be well organized. Decide whether you’ll give this task to an individual, a team or possibly even an entire department. Accuracy and organization are key for your records and books. The reason for this is you’ll likely be asked to furnish evidence of any business decisions made by your Board of Directors, and well-maintained records can also go a long way in saving you on future legal costs.
Call the First Meeting of the Board of Directors or Shareholders
The way your initial Board of Directors or shareholders meeting goes is heavily dependent on the overall size of your corporation as well as your personal preferences. If yours is a larger corporation, you might want to:
- Elect officers
- Decide on salaries
- Open a bank account
- Give out corporate stock shares
- Ratify incorporator actions and bylaws
- Endow the Secretary with signing power
You might decide to skip all of this if you have a small corporation and instead take care of each item in your articles of incorporation. In any case, it’s vital you make sure your initial meeting is well documented and that all future meetings are held in accordance with business laws.
Document All Decisions and Action in the Corporate Minute Book
One reason the subject of the corporate minute book keeps coming up in this article is because it’s one of the most essential pieces of successfully running your corporation. In regards to how to properly document actions and decision in your book, you’ll want to have several separate sections. Have a file-stamped copy of your Articles or Certificate of Incorporation as well as all necessary amendments. Your minute book should also contain your bylaws and a list of the Board of Directors and/or shareholders. You can give a copy of your minute book to your lawyer, and you can also store your book electronically on a cloud, if you like. No matter how busy your days get in the course of operating your business, always take out time to take care of the above legal procedures.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.