Preparing the Necessary Paperwork to Set Up Your New Enterprise
You’ve had the dream for a long time—being your own boss, setting your own hours, being completely responsible for your own success. If you’re planning on going into business for yourself, one of the most important steps takes place at the beginning of the process—preparing and executing all the documents necessary to comply with state business laws and to protect your legal rights (and your investment).
Articles of Incorporation or Organization
To meet state business law requirements and to obtain the legal protections that come with a corporation or a limited liability company, you need to file documentation with the state. If you are setting up any type of corporation, you need to file articles of incorporation. For a limited liability company, you’ll file articles of organization. The articles identify the name of the commercial entity, the physical location of your offices, how much stock will be issued and the type of stock (for a corporation) and who will serve as your agent to receive service of process or other notifications. There is a fee for filing your articles.
Your by-laws are the rules that govern your corporation, directing your board of directors to oversee the operations of the company. By-laws typically address a wide range of issues, including:
- the size of the board, when the board must meet, the powers and responsibilities of board members, the tenure of board members and how many board members are required for a quorum
- the types of stock that may be issued and any voting rights that come with stock
- information about shareholder meetings, including annual meetings
- Procedures for recordkeeping, including the amendment of articles of incorporation and by-laws
- Rules with respect to the financial operations of the business, including financial audits
- Identifying information about the company, including name, address and principal place of business
An LLC Operating Agreement is a legal document that explains the ownership and member duties of your Limited Liability Company. This agreement set out the financial and other working relations among the LLC members.
If you set up a partnership, instead of a corporation or limited liability company, you will want to put a partnership agreement in place. The partnership agreement identifies all parties, addresses how revenues will be treated, and generally defines the rights and responsibilities of all partners.
A shareholder agreement is intended to protect a shareholder’s interest or investment in a stock corporation. It typically establishes the rights, responsibilities and limitations imposed on shareholders. It frequently includes specific provisions protecting minority shareholders.
Under most state business laws, corporations are required to keep detailed records of all formal meetings. This record, known as minutes, includes all decisions made at annual or special meetings of the board or the shareholders of the corporation.
A corporate resolution is a written document that provides evidence of the decision of a corporate board. The by-laws of the business typically define when corporate resolutions are necessary. Often, however, when external business is conducted (such as the opening or closing of financial accounts), a corporate resolution is required.
At MCIS Law, PLLC, in Stafford, we aggressively advocate for businesses and individuals in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.