You have an exciting idea and startup capital, so you decide to become an entrepreneur and launch your own business. Now what? Your first step is to choose the structure under which your business will operate. If you plan to raise additional capital through stock sales and wish to keep your finances separate from the business finances, a corporation may be right for you.
By default, Virginia corporations are chartered as C-Corporations, as a knowledgeable attorney at our firm can explain. However, you can elect to become an S-Corporation at filing, which is more restrictive and has to do with how the Internal Revenue Service taxes you. Contact a Virginia C-Corporations lawyer who can walk you through the incorporation process.
Before incorporating a business, owners must pick an entity name and make sure no other entity in Virginia is using it. This involves searching assigned names through the Secretary of State. According to Virginia Code § 13.1-630, all entity names in Virginia must contain a suffix identifying the company as a corporation, such as inc., incorporated, or ltd.
C-Corporations must also appoint a registered agent as the official recipient of crucial legal and government documents, such as lawsuits. A Virginia C-Corporations attorney could ensure all incorporation steps are appropriately handled.
Business owners can file articles of incorporation either online or by mail in association with the Virginia State Corporation Commission (filing fees apply). The articles name and describe the business’s purpose.
C-Corporations have rights and obligations separate from their owners. They earn profits and accrue losses, can be sued, and sue, and pay taxes, although they can distribute profits as taxable dividends to shareholders. A skilled lawyer in the area can further explain these benefits of C-Corporations.
After the articles of incorporation are filed, the company must adopt bylaws and set up its books and records. Bylaws govern how the corporation will be managed and cannot contradict the filed articles or Virginia law. Bylaws are adopted at the initial board of directors meeting.
Virginia law also mandates that corporations keep minutes and records of board and shareholder meetings, any notice waivers, and any actions taken by board committees or on behalf of the corporation. Other official records will include shareholder resolutions, amendments to bylaws, other filings such as with the Security and Exchange Commission, and the official IRS letter verifying the company’s employer identification number (EIN).
Additional steps that a Virginia lawyer could help with in establishing a C-Corporation include the following:
There are many steps to take before a C-Corporation can commence business and many tasks to complete during the life of the entity. An attorney at our Virginia office could help a C-Corporation maintain books, records, and filing requirements.
C-Corporations offer shareholders many advantages. They can raise capital through equity offerings in various classes of stock to as many shareholders as they wish. Shareholders are generally not responsible for the corporations’ debts (usually only if they act in bad faith), and companies can engage in any legal business. They can choose their fiscal cycle and retain profits to accrue capital.
When you are ready, one of the first decisions you must make for your new business is the structure you will use to run it. The decision rests on how you envision your company now and in the future. We can answer your questions when you sit down with us to discuss your plans.
A Virginia C-Corporations lawyer is available to help you comply with state and federal laws governing your business. Call Sparks Law today to learn why this corporate designation might be best for you.