Business formation requires more than just an EIN and Articles.
Over the years, I have gotten a lot of flack over breaking the news to new aspiring business owners that business formation is not as easy as internet guru's and registering agent services who charge you $79 - $150 to do the leg work for your EIN and articles may have you believe.
Because they are not accountants or lawyers, they can't give you any advice on the next steps. In fact, they will often try to upscale you the services they cannot legally provide. But any professional will tell you the importance of forming your business from the ground up.
A lot of the times it is not necessary to form an LLC or Corporation until you have established proof of concept as a sole proprietor generating a profit. This way you can show start up capital when you form either, and have the funds necessary to complete all steps involved in business formation.
There are some who speak against this because they are either inexperienced or trying to make you pay for services too soon. But thing like business insurance and having a an affordable legal plan where you can have a lawyer review or draft your contracts, policies, and terms and conditions can protect you against liability while you are in the beginning stages of a sole proprietor trying to scale up to an LLC or Corporation.
By-laws include the rules and regulations that govern your corporation. Each state has its own requirements for what items must be included in the bylaws.
Among a number of other details, corporate bylaws generally contain:
the structure of the organization
the duties and responsibilities of a corporation's members
details about the board of directors
information about when and where directors' and shareholders' meetings will be held
a list of committees
Limited liability companies (LLCs) in many states are required to create an LLC operating agreement; a document that provides a framework for their operation.
LLC operating agreements typically contain information about:
members' percentages of ownership
members' rights and responsibilities
members' voting powers
allocation of profits and losses
management details
the fiduciary duties of members and managers
there is a provision for single-member LLCs
These documents are often requested by:
lenders, when you're trying to obtain financing
banks, when you're opening a business checking account
potential business partners or investors
attorneys and accountants
requested during the application for the Veteran, Minority , and Women owned certification.
maybe requested to secure a government contract
may be used or requested to show that you are an established business during audits or possible lawsuits.
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