Business

It is the basic charter of a corporation which spells out the name, basic purpose, incorporators, amount and types of stock which may be issued, and any special characteristics such as being non-profit.

Back to Top

The following checklist can prevent getting overwhelmed or missing crucial steps:

1. Write a business plan
2. Choose the management team
3. Decide on a business structure
4. Select a corporate name
5. Select the state of incorporation
6. Create a capitalization plan
7. Retain corporate status
8. Obtain permits and licenses in order to:
   1. Identify your business to ensure accountability
   2. Protect public health and safety
   3. Keep track of finances for tax purposes

Back to Top

Bylaws are the written rules for conduct of a corporation, association, partnership or any organization. They should not be confused with the articles of incorporation, which only state the basic outline of the company, including stock structure. Bylaws generally provide for meetings, elections of a board of directors and officers, filling vacancies, notices, types and duties of officers, committees, assessments and other routine conduct. Bylaws are in effect a contract among members and must be formally adopted and/or amended. Corporate bylaws are not filed with the Secretary of State. Bylaws are kept at the corporation's principal executive office (if located in this state) or the corporation's principal business office in this state. The bylaws shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside this state and the corporation has no principal business office in this state, it shall, upon the written request of any shareholder, furnish to such shareholder a copy of the bylaws as amended to date.

Back to Top

A corporation is owned by its stockholders. A stockholder may serve on the Board of Directors and also be an officer of the corporation. In larger corporations, while stockholders may not directly manage the affairs of the corporation, they are able to influence corporate decisions through indirect actions like electing and removing directors, approving or disapproving amendments to the articles of incorporation and voting on important corporate decisions. The members of the Board of Directors are responsible for managing the affairs of the corporation. The directors make only major business decisions but they supervise and appoint officers who make the corporation’s daily business decisions. Officers are responsible for the everyday management of the corporation. Typically, officers are appointed directly by the Board.

Back to Top

In a general sense, a corporation is a business entity that is given many of the same legal rights as an actual person. Corporations may be made up of a single person or a group of people, known as sole corporations or aggregate corporations, respectively. Corporations exist as virtual or fictitious persons, granting a limited protection to the actual people involved in the business of the corporation. This limitation of liability is one of the many advantages to incorporation, and is a major draw for smaller businesses to incorporate; particularly those involved in highly litigated trade. A company is incorporated in a specific nation, often within the bounds of a smaller subset of that nation, such as a state or province.

The corporation is then governed by the laws of incorporation in that state. A corporation may issue stock, either private or public, or may be classified as a non-stock corporation. If stock is issued, the corporation will usually be governed by its shareholders, either directly or indirectly. The most common model is a board of directors which makes all major decisions for the corporation, in theory serving the best interests of the individual shareholders. One benefit is that a corporation's liability for damages or debts is limited to its assets, so the shareholders and officers are protected from personal claims, unless they commit fraud. In the United States there are three major types of corporations: Close, C, and S.

Back to Top

Suppose that the business's legal name is different than the trade name, that is, the name under which it operates and is known by customers. In that case, a fictitious business name is being used. For example, if John Johnson called his sole proprietorship Canadian Transportations, then Canadian Transportations would be considered a fictitious business name. Because John Johnson runs a sole proprietorship, the business's legal name is his full name, John Johnson. A fictitious business name like Canadian Transportations is sometimes referred to as a doing business as (d/b/a) name. Most states require registration of fictitious business names.

Back to Top

A legal name is the name of the entity that owns a business as it will appear on documents registered with the state in which it operates. For example, a sole proprietorship's legal name is the owner's full name. The legal name of a general partnership may appear in the written partnership agreement, but if not named in the partnership agreement, then the partnership’s legal name is a combination of the last names of the owners. Limited partnerships, limited liability companies and corporations register their legal names with the secretary of state or other state agency.

Back to Top

A limited liability company, commonly called an "LLC," is a business structure that combines the “pass-through taxation” of a partnership or sole proprietorship with the limited liability of a corporation. Similar to owners of partnerships or sole proprietorships, owners of a LLC report business profits or losses on their personal income tax returns. However, the LLC itself is not a separate taxable entity. Similar to owners of a corporation, all LLC owners are protected from personal liability for business debts and claims. So, if the business owes money or faces a lawsuit, only the assets of the business itself are at risk. Creditors usually can't reach the personal assets of the LLC owners, such as a house or car. Both LLC owners and corporate shareholders can lose this protection by acting illegally, unethically, or irresponsibly.

Back to Top

Before you can apply to the IRS for tax-exempt status, your organization must first become a corporation. Nonprofit incorporation is very similar to creating a regular corporation except that a nonprofit must take the extra steps of applying for tax-exempt status with the state in which it incorporates and with the IRS.

Back to Top

A partnership is a business with more than one owner that has not filed papers with the secretary of state to become a corporation or limited liability company. There are two basic types of partnerships: (1) general partnerships and (2) limited partnerships. A general partnership is the simplest and least expensive co-owned business structure to create and maintain. A limited partnership is a special type of partnership which is very common when people need funding for a business, or when they are putting together an investment in a real estate development. A limited partnership requires a written agreement between the business management who is /are the general partner or partners, and all of the limited partners. The limited partners may not participate in the management decisions of the partnership or they will lose their limited partnership status.

Back to Top

Abbreviated “TM”, a trademark is a name, symbol, or other device identifying a product, officially registered and legally restricted to the use of the owner or manufacturer. Words that merely name the maker (but without particular lettering) or a generic name for the product are not trademarks. Trademarks may be registered with the U.S. Patent Office to prove use and ownership. Use of another's trademark or one that is confusingly similar is infringement and the basis for a lawsuit for damages for unfair competition and/or a petition for an injunction against the use of the infringing trademark.

Back to Top

A trade name is a name of a business or one of its products which, by use of the name and public reputation, identifies the product as that of the business. A trade name belongs to the first business to use it, and the identification and reputation give it value and the right to protect the trade name against its use by others.

Back to Top

A foreign (out of state or country) corporation transacting intrastate business in the State of California must qualify to do so with the Secretary of State's office. "Transacting intrastate business" is defined as entering into repeated and successive transactions of a corporation's business in this state other than interstate or foreign commerce. See California Corporations Code Section 191. You should consult with legal counsel if you are unable to make a determination based on the applicable statutes.

Back to Top


To form a corporation, you must choose a business name, file Articles of Incorporation with your state’s Secretary of State, appoint a registered agent, create corporate bylaws, issue stock, and hold an initial board meeting.

Back to Top


They are formal documents filed with the state to legally create a corporation. They typically include the corporate name, purpose, registered agent, share structure, and incorporator’s information.

Back to Top


Bylaws are internal rules governing a corporation's operations and management. They are not always required by law but are essential for establishing procedures and maintaining legal structure.

Back to Top


C-Corps are taxed separately from their owners, potentially resulting in double taxation. S-Corps allow profits to pass through to shareholders, avoiding corporate tax, but have restrictions on ownership and share classes.

Back to Top


Officers are appointed by the board of directors to manage day-to-day operations. Common roles include CEO, CFO, and Secretary.

Back to Top


Corporate governance refers to the system of rules, practices, and processes by which a corporation is directed and controlled. It involves the board of directors, shareholders, officers, and internal policies.

Back to Top


They owe the corporation a duty of care (acting prudently), duty of loyalty (avoiding conflicts of interest), and duty of good faith (acting in the company’s best interest).

Back to Top


Generally, no. Shareholders elect the board but don’t manage the company’s operations. However, they can vote on major changes like mergers, amendments to bylaws, or dissolution.

Back to Top


Corporations are typically required to hold annual shareholder meetings and regular board meetings, depending on state law and the bylaws.

Back to Top


Corporate minutes are written records of meetings and decisions made by directors and shareholders. They are required to maintain corporate formalities and protect liability shields.

Back to Top


You must file annual reports, pay franchise or business taxes, maintain a registered agent, and adhere to state corporate requirements.

Back to Top


A corporate seal is a formal stamp used to endorse documents. While once required, it's largely ceremonial today and not mandatory in most jurisdictions.

Back to Top


An Employer Identification Number (EIN) is issued by the IRS and is required for hiring employees, opening business bank accounts, and filing tax returns.

Back to Top


Issued by the state, it confirms that your corporation has met all regulatory and tax obligations and is legally authorized to do business.

Back to Top


It’s the process of registering your corporation to legally operate in a state other than where it was originally formed.

Back to Top


Basically, shares represent ownership in a corporation. They are issued to founders and investors in exchange for capital or other contributions, as authorized in the Articles and recorded in the stock ledger.

Back to Top


A stock ledger is the official record of stock issuance, transfers, and ownership. It helps resolve disputes and ensures compliance with securities laws.

Back to Top


Federal and state securities laws apply. Issuing stock usually requires filing for exemptions or registering with the SEC or state regulators.

Back to Top


Dilution occurs when new shares are issued, reducing the ownership percentage of existing shareholders. It may impact control and value.

Back to Top


It’s a contract between shareholders outlining how shares are transferred in cases like death, disability, or departure from the company.

Back to Top


Courts may disregard a corporation's separate legal status and hold shareholders personally liable if corporate formalities are ignored or if the corporation is used for fraud.

Back to Top


Yes. Corporations can be sued in their own name. Generally, shareholders are not personally liable unless the corporate veil is pierced.

Back to Top


A merger combines two entities; an acquisition is the purchase of one by another. Legal steps include board and shareholder approval, due diligence, drafting of agreements, and regulatory filings.

Back to Top


Voluntary dissolution requires board and shareholder approval, filing Articles of Dissolution, settling debts, and distributing remaining assets.

Back to Top


They protect directors, officers, and employees by covering legal expenses and liabilities incurred while performing corporate duties.

Back to Top


You must maintain Articles, bylaws, minutes, resolutions, share ledgers, tax documents, and compliance filings.

Back to Top


Review your corporate governance documents, ensure financial records are accurate, and seek legal guidance. Prepare to demonstrate compliance with regulatory and tax requirements.

Back to Top


A system of policies and procedures designed to detect and prevent legal violations, especially related to ethics, anti-corruption, and regulatory matters.

Back to Top


Yes, is it always recommended to carry corporate insurance policies. The essential policies include general liability, directors & officers (D&O) insurance, employment practices liability, and cyber liability, depending on your business operations.

Back to Top


You should consult an attorney when forming your corporation, drafting governance documents, issuing stock, entering major contracts, raising capital, handling disputes, or undergoing audits or regulatory actions.

Back to Top

Intellectual property (IP) refers to creations of the mind such as inventions, designs, brand names, written works, software, and trade secrets. IP rights protect these creations from unauthorized use, helping creators and businesses maintain competitive advantages, monetize innovation, and safeguard their brands or content.

Back to Top

The primary types of IP protections include:

• Copyrights: Protect original creative works like books, music, software, and art.
• Trademarks: Protect brand identifiers such as logos, slogans, and product names.
• Patents: Protect new inventions or processes.
• Trade Secrets: Protect confidential business information like formulas or strategies.

Each offers different protection durations, scopes, and enforcement mechanisms.

Back to Top


You can protect your brand name or logo by registering it as a trademark with the U.S. Patent and Trademark Office (USPTO). This provides nationwide legal protection and exclusive use rights. You should also perform a trademark search before filing to avoid infringement.

Back to Top


Technically, copyright protection exists automatically once an original work is created and fixed in a tangible medium (e.g., writing, recording). However, registration with the U.S. Copyright Office provides important legal benefits such as the ability to sue for statutory damages and attorney’s fees in case of infringement.

Back to Top


An invention may be patentable if it is:

• Novel: Not already publicly known.
• Non-obvious: Not an obvious improvement or combination.
• Useful: Has practical application.

A patent attorney can conduct a prior art search and advise whether you should proceed with a utility, design, or provisional patent application.

Back to Top


A trade secret is confidential information that gives a business a competitive edge (e.g., formulas, client lists, manufacturing processes). It is protected through confidentiality agreements, access controls, and internal policies. Unlike other IP, trade secrets are not registered but rely on ongoing secrecy.

Back to Top


Start by collecting evidence of infringement. Then, consult an IP attorney to: (1) send a cease-and-desist letter; (2) pursue DMCA takedowns for unauthorized online use; and/or (3) file a lawsuit if informal resolution fails. The legal remedies may include injunctive relief, damages, and destruction of infringing goods.

Back to Top


Yes. You can enter into an IP licensing agreement that grants others the right to use your IP under specific terms such as: (1) duration and territory; (2) payment or royalty terms; and/or (3) scope of permitted use. This allows you to monetize your IP while retaining ownership.

Back to Top


A registered business name (a “DBA”) lets you legally operate under a name, but it doesn't protect the brand. A trademark, on the other hand, provides legal protection against others using similar names or logos in your industry. So, registering both is often recommended for comprehensive protection.

Back to Top

• Copyright: Life of the author plus 70 years (or 95/120 years for corporate works)
• Trademarks: Indefinite as long as they are in use and properly renewed (every 10 years in the United States)
• Patents: 20 years from filing (utility patents) or 15 years (design patents)
• Trade Secrets: Potentially forever as long as they remain secret and safeguarded

Back to Top