C-Corporation: A business entity that must be established according to state statute which provides for limited liability of its owners. A corporation is a legal entity separate from its owners or shareholders.
S-Corporation: A corporation with less than 75 shareholders where the corporation is not taxed directly, but rather the shareholders directly, according to their percent of ownership in the corporation.
Alter Ego Doctrine: This principle allows the courts to refuse a corporation’s right to shield its owners from the liabilities associated with the corporation. It stipulates that a corporation formed merely for personal advancement rather than sound and legitimate business purposes cannot be considered a corporation.
Corporate Formalities: The procedure that must be followed to allow a corporation to run as a separate entity. They are simply the responsibilities of keeping your corporate record book in compliance with the laws and regulations. If you take a few simple steps, you can rest easy that your corporation is strong and will protect you.
List of Officers and Directors: A list filed with the Secretary of State that gives the names and addresses of the directors and certain officers of the corporation.
Registered Agent: One who is readily available for service of legal process. The registered agent is responsible for making sure all legal process is forwarded to you in a timely manner.
Resolution: A written consent to action by the Board of Directors.
Articles of Incorporation: These articles represent the contracts that hold the corporation together and set the guidelines for the business purpose and how the corporation will be structured.
Buy/Sell Agreement: A buy-sell agreement is an essential organizational document for any business with more than one owner. If you have a business partner with whom you share control of your company, you should have a signed, up-to-date, buy-sell or shareholder agreement.
Shareholder: An owner of stock in a corporation.
Director: An individual selected to sit on a board that transforms the goals of the stockholders into action plans.
Fiscal Year: An accounting period of 12 months.
Employee: An individual hired by a business to fulfill the common duties of the business through an employee contract.
Family Limited Partnership: A partnership authorized by state statute which has at least one general partner and one limited partner. The limited partner(s), cannot share in the management or control over partnership affairs and have no liability exposure beyond their financial interest in the partnership. The general partner(s) who have full control over partnership affairs, are fully liable for partnership debts. The family limited partnership allows you to convey wealth to your children, avoid estate taxes, and retain control of your wealth at the same time. The family limited partnership also helps to protect your family assets from potential creditors by making it difficult for creditors of partners to reach the underlying partnership interest.
General Partnership: All partners in a general partnership are general partners who have equal rights of management. Each partner can be individually liable wholly or partially for partnership debts.
Living Trust: A trust that becomes effective immediately while the grantor is still alive, avoids probate costs and delays when the grantor dies. Property held by one person for the benefit of another person. Sometimes this is called an inter vivos trust.
Joint and Several Liability: Two or more persons in a joint venture such as a general partnership where each person can be wholly or partially liable for any debt or other liabilities incurred by the venture.
Joint Tenancy: Property, real or personal, that is owned by two or more persons which gives final ownership to the person who out lives the other joint tenants. This is commonly known as the right of survivorship.
Irrevocable Trust: A trust that cannot be changed or revoked by the grantor.
Limited Liability Company: A business entity authorized by state statute which provides limited liability to all of the owners with same tax advantages of a partnership.