Corporations

Notwithstanding, the popularity of corporate business entities does not necessarily mean that they are easy entities to form and operate. As such, the assistance of a Tennessee incorporation lawyer can help business owners tackle the many legal issues that arise during the incorporation of a new business.

If you are seeking to form a corporation, it is critical that you contact the Tennessee incorporation law firm of Douglass & Runger to learn more about your legal options.

Benefits And Drawbacks Of Incorporation

One of the primary benefits of a corporation is the protection it offers to the owners of the corporation: its shareholders. In general, a shareholder is not personally responsible for the debts or liabilities of the corporation. Thus, even if the corporation must eventually dissolve and wind up its affairs due to financial constraints, the shareholders themselves will generally retain no liability for paying any of the corporation’s outstanding debts.

Those considering incorporating must also appreciate the tax disadvantages of this form of business entity. In general, a corporation’s profits are subject to “double taxation” in that they are initially taxed when the corporation receives them (the corporation pays an income tax on its profits) and, if these profits are shared with the shareholders in the form of a dividend, the shareholder must pay taxes on the dividend on its income tax return.

Issues Surrounding Incorporation And Corporate Operations

When you decide to begin a new corporation, there are a host of legal issues that must be handled at the outset. From making the appropriate filings with the Secretary of State to the process of novation, an experienced incorporation attorney can help make the process of getting a corporation up and running easier:

Filings with the Secretary of State

An incorporator must file certain documents with the Secretary of State to have his or her corporation properly registered. One of the most basic documents required is a charter and articles of incorporation. These documents inform the individuals who examine them about the nature of the business’s operations and how the business is to be run.

Authorization of the Issuance of Shares

The corporation’s foundational documents will indicate how many shares will be authorized and the types to be issued when the business is initially formed. Each share represents an ownership interest in the corporation.

First Meeting of the Shareholders

Soon after a business is incorporated, the shareholders will hold their first meeting to elect directors and other high-level managers for the corporation. This is a critically important meeting, as these directors will be responsible for overseeing and operating the business and designating managers to run its day-to-day affairs.

Novation

Novation refers to the process whereby a corporation adopts and assumes responsibility for contracts and obligations that were entered into prior to and for the purpose of its incorporation. In novation, the corporation relieves the individual person of legal responsibility for paying back these obligations.

Annual Reports

Each year, the Tennessee Secretary of State requires corporations to file an annual report detailing certain aspects of the corporation’s activities during the preceding year. If these reports are not made in a timely manner, the Secretary of State may take certain legal actions against the corporation.

Contact A Seasoned Memphis Incorporation Lawyer Today To Learn More

Although many individuals enjoy the benefits associated with operating a corporation, forming a corporation involves many steps that, if not taken, can result in legal trouble. Douglass & Runger is a Memphis-area law firm that can assist you in completing the necessary steps to incorporate and get your new corporation up and running.

Business Law Matters

When starting a business, consider the legal structure: partnership, LLC, or corporation. Formation services can help. Plan for business succession and legal issues such as disputes and dissolution. Understand business law and legal resources for help.