Business Law Basics

What you should know to form, maintain or dissolve a corporate entity.

Why should I form a corporate entity?

Limited liability. Personal assets are not at risk for satisfying corporate debts or liabilities.
Owner/employee. A business owner who works in his or her own business may become an employee and thus be eligible for reimbursement or deduction of many types of expenses, including health and life insurance.
Perpetual existence. A corporate entity will exist until the owners decide to dissolve it or merge with another business.

What kinds of corporate entities exist?

Corporations

A General Corporation or C Corporation allows for an unlimited number of shareholders.
A Close Corporation limits the number of shareholders to a maximum number of 30.
An S Corporation is a General Corporation with a special tax status.

Limited Liability Company
A Limited Liability Company combines the limited liability protection of a corporation with the "pass through" taxation of a sole proprietorship or partnership

Partnerships

A General Partnership consists of two or more partners who share equal rights and responsibilities in connection with management of the business. Any individual partner can bind the entire group to a legal obligation.
A Limited Partnership allows each partner to restrict his or her personal liability to the amount of his or her business investment.
A Limited Liability Partnership retains the tax advantages of the general partnership form, but offers some personal liability protection.

What do I need to incorporate?

Articles of Incorporation/Organization are the primary rules governing the management of a corporation and are filed with a state or other regulatory agency.
Initial List of Officers or Managers is a list of corporate officers or people who represent your company.
Bylaws or an Operating Agreement eliminate misunderstandings among the owners and can be used to control voting, management structure, division of profits, resolution of disputes, disposition of ownership interests and many other issues.

How do I maintain my corporate entity?

Appoint a Registered Agent.
Maintain personal accounts separately from business accounts.
Conduct annual meetings and maintain minutes of those annual meetings.
Keep your company in good standing.

How do I dissolve my corporate entity or shut my business’ doors?

Follow the procedures set forth in your organizational documents such as making distributions, filing final tax returns, etc.
Prepare an action authorizing dissolution.
File Articles of Dissolution.
Establish a reserve account for liabilities.

How can my business survive the “New Economy?”

Form a corporate entity if you’ve not yet done so.
Be sure to maintain current books and records.
Conduct annual meetings and prepare annual minutes.
Keep your company adequately capitalized.
Keep your company in good standing with the State by making sure all filings are current.
Separate business accounts from personal accounts

For more information, visit the Nevada Secretary of State Web site: http://www.nvsos.gov