FAQ (frequently asked questions) and Misc. Information
Corporate Formation Definitions
- Apostille - A
standard certification provided under the Hague
Convention
of 1961 for the purpose of authenticating documents for use in foreign
countries.
- Board of
Directors - (see Directors)
- Corporate
Camouflage - A concept that encompasses the principle that privacy can
best be obtained by using corporate entities to attempt to blend in
with everyday business activity, instead of relying on anonymity which
can often raise more questions than was desired.
- Corporation - An
artificial person or legal entity created by or under
the
authority of the laws of a state. As such a corporation is
treated
as a person which can sue and be sued, and is distinct from the
individuals
who comprise the shareholders.
- Director -
Generally, the head of an organized group, specifically one of a group
of individuals who form the Board of Directors which have
responsibility for the selection, oversight and supervision of the
Corporation's
officers.
- Disregarded
Entity - Under I.R.S. rules, an LLC can elect to be "disregarded"
for tax purposes, which means that if it is owned by more than one
Member it is treated as a partnership, and if it is owned by one Member
it is treated as if the LLC did not exist and the sole owner is the
taxable entity for all transactions.
- EIN - Employer Identification Number - commonly referred to
as a company's "Federal Tax ID."
- General Partner
- The individual or entity which agrees to form a limited
partnership and accept 100% of all the liability of the partnership
regardless of percentage of ownership, and who also agrees to manage
the limited partnership.
- Limited Liability Company (LLC) - An entity that combines the limited
liability advantages of a Corporation with the ease and flexibility of
management of a Partnership. A Limited Liability Company may
elect to be managed by its Members or by Managers, and may elect to be
taxed as a partnership, as a disregarded entity, or as a taxable
association (a corporation).
- Limited Liability Partnership
(LLP) - A Limited Liability Partnership is in
all respects a general partnership except for the fact that the
partners are able to limit their liability for the acts and omissions
of the other partners (usually regarding the professional acts of the
other partners), but not the general business debt of the
partnership. Most states restrict the effectiveness, if not
actual participation, to professionals (lawyers, doctors, accountants,
engineers, etc. -- professionals who are not allows by law to limit
their liability for their own personal acts and/or omissions).
- Limited Partnership (LP) - A business structure that allows one or
more partners (called limited partners) to limit their liabilities for
partnership debts in much the
same way as a shareholder would be able to do. Limited
Partnership rules require that there be at least one "general partner" who has
unlimited personal liability. As a general rule, the general
partners run the business, and limited partners, who are usually
passive investors, are not allowed to participate in day to day
decision making. If they do, they risk being treated as general
partners with
unlimited personal liability. There are several tax advantages
and asset protection benefits associated with a limited partnership.
- Manager - The
title held by the individual or group which are elected by the Members
of a limited liability company, and control the LLC either by
direct management or through officers such as a president, secretary,
etc. The Manager roughly corresponds to the role of the Director
of a corporation. Not all LLCs are managed by a manager, but are
instead managed by the Members.
- Member -
The individual or entity which has the ownership interest in a limited
liability company.
- Registered Agent
and Office - The individual or entity that serves as default
recipient for service of process and for other notices as required by
various laws. Virtually every jurisdiction requires that a
company or other registered entity must maintain a local registered
agent and office regardless of where the company maintains a business
office.
- S Corporation
- An S Corporation is a regular corporation which has elected to be treated by the IRS as a "pass though" entity.
This is different than the LLC which is treated as a "disregarded" entity by the IRS. Although the difference may seem
irrelevant, it can be quite important depending upon the intended purpose of the entity.
- Shareholder
- The individual or entity which own a corporation represented by
certificates of shares in the company. The shareholder is
generally allowed to vote for the Directors, who in turn select
officers of the company to run the day to day operations.
- Shares -
The unit of ownership which is generally represented by certificate of
stock in the company.
- Taxable
Association - Under I.R.S. rules, an LLC can elect to be treated
as a "taxable association" which means that it will be treated like a
corporation for tax purposes.
- Verified Copy
- A copy which has been verified by an authorized officer,
usually a notary, the clerk of court, or the agency
which maintains control over the document.
|
