Once you have filed your Articles of Incorporation

By-Laws

The articles of incorporation identify your company's structure while the by-laws spell out how your company will be operated. A corporation's by-laws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation.

Illinois by-laws should outline everything that you could consider as essential for the legal (corporate compliance with the Illinois statutes) management of your company. Listed below are items that you should consider as pertinent to your company's operations.

REGISTERED AGENT
1. Identify your principal office in the State of Illinois, and determine if that office can be changed from time to time by the board of directors, if you do not have a physical location and your representation is through a Registered Agent, identify their principal office location and address and your registered agent's name.

SHAREHOLDERS
2. Identify shareholder information pertaining to annual and special meetings, location and times, how the shareholders will be notified of such meetings, and whether the actions of the shareholders can be taken without a meeting and by written consent. If your company pays dividends, you may want to fix a record date to determine shareholders entitled to notice of a vote at a meeting, identify a quorum, proxies and identify voting shares as set forth in your articles of incorporation. This section also may address voting procedures.

DIRECTORS
3. Identify director information pertaining to how many directors, tenure and their qualifications and if and how the number of directors can be increased or decrease, replaced, removed or retired and addresses vacancies in general. Annual, regular and special meetings and notice for such meetings should be outlined, and reference to what constitutes a quorum. This section should identify informal actions (actions by the board of directors without a meeting and documented by written consent), compensation, presumption of assent and resignation procedures.

OFFICERS
4. Identify the number of officers your company may have, their title, how they are to be elected and their term of office, removal, vacancies and a description of each officer's role within the company. Officer elections are typically handled at the annual meeting, with documentation evidencing their election by written consent.

COMMITTEES
5. If your company will have committees, identifying how they will be appointed, what constitutes a quorum, how they will act (unanimous consent in writing without a meeting or by meeting with appropriate notice given).

CONTRACTS, LOANS AND BANKING
6. Identify who authorizes and signs on behalf of the corporation and what actions need written consent of the board of directors.

CERTIFICATE FOR SHARES
7. Identify whether the issued shares of the corporation will be represented by certificates, who will sign the certificates, documentation of issuance's, how you will deal with lost or transferred shares and address any restrictions on transfer of any shares.

FISCAL OR CALENDAR YEAR
8. You can choose to identify whether your company will have a calendar or fiscal year end, or you can specify that this will be determined by resolution of the board of directors.

CORPORATE SEAL
9. Identify if your company will use a corporate seal. Having a corporate seal is no longer mandatory by Illinois statute, but including this language will document the fact that the company either does or does not use a seal.

WAIVER OF NOTICE
10. Identify whether notices of meetings can be waived in writing.

INDEMNIFICATION OF OFFICERS AND DIRECTORS
11. This is probably the most important aspect of your company by-laws. Identify who this indemnification covers and to what extent, specify authorization by directors, legal counsel of shareholders, repayment of expenses related to same, insurance, and shareholder notification.

AMENDMENTS
12. Identify that the by-laws may be amended by written consent of the shareholders entitled to vote and by written consent of the directors.
Illinois Registered Agent can assist you with the regulation (corporate compliance) of your company's written consents that will effectively avoid your company's piercing the corporate veil. We offer a resolution preparation service that is very reasonably priced.

Illinois Registered Agent, Inc.

Incorporating on your own - what to think about before filing your Articles of Incorporation

Incorporating a business may seem daunting to those not familiar with the Secretary of State requirements, however, it is not impossible to prepare the filings yourself if you have a general idea of what is expected and what should be thought out prior to your formation. Today I am focusing on Corporations, there is just too much information to combine the procedures for Illinois Incorporation and Illinois Limited Liability Company formation's into one neat tidy package. I have provided links to the Illinois forms for Articles of Incorporation and Application for Authority to do business in Illinois .

Sometimes just knowing what is expected from the State of Illinois will help you to think about what you should be considering when it comes to starting a business, such as your company name, what is your company's true purpose, who accepts your service of process and correspondence from the State of Illinois, who is your incorporator, how will you deal with stock, how many shares and class of stock do you want to issue and what is its initial value... Just by identifying the above mentioned items, you have defined the basics of your company's structure and a general operating premise.

The following are things that belong in the Illinois Articles of Incorporation and are required to be included in your corporate filing:

1. Company Name. A corporation must have one of the following endings: Corporation, Incorporated, Company or Limited and may be an abbreviation of any of those endings.

2. Purpose. Each company must specify a purpose for organization. The State of Illinois will accept a standard purpose clause which is: "The transaction of any or all lawful businesses for which corporations may be incorporated under the Illinois Business Corporation Act of 1983, as amended".

3. Registered Agent. The address of the initial registered office and its initial registered agent. (This is where we hope you will use our services, we are the most reasonably priced on the web!

4. Incorporator. The name and address of your incorporator (Incorporator refers to the person filling out and filing the Articles of Incorporation forms for you).

5. Authorized Shares of Stock. The number and class or series of shares you intend to authorize and the consideration to be received for each class and share of stock. (Keep in mind that you will be paying franchise tax on the paid-in- capital from the initial issuance of stock. If you authorize 100 shares of stock at $1.00 per share, your franchise tax base will be $100.00. If you increase the value of the shares to $50.00 per share, your franchise tax base would then be $5000.00).

6. Issued Shares of Stock. The number and class of shares you intend to issue and the consideration to be received for each class and share of stock.

7. Designation of Class of Stock. You only need to consider this if your shares are divided into classes, the designation of each class and a statement of designations, preferences, qualifications, limitations, restrictions or special or relative rights associated with that particular class of stock. (This type of designation is more complex and you may want to discuss with an attorney the implications of issuing various classes of stock.) If you are not issuing stock with specific classes, you will not need to address this issue in your Articles of Incorporation.

8. Series of Stock. You will only need to consider this if you are issuing preferred or special class in a series, then the designation of each series and a statement of the variations in the relative rights and preferences of the different series, if the same are fixed in the articles of incorporation, or a statement of the authority vested in the board of directors to establish a series and determine the variations in the relative rights and preferences of the different series. This too should be discussed with an attorney to understand the implications of issuing various class and series of stock.

Items that can be included in the Articles of Incorporation, but are not required by statute:

1. Directors. You may include the names and addresses of the individuals who are to serve as the initial directors.

2. Provisions not inconsistent with law with respect to: (for items listed below, I would suggest you discuss their inclusion in the Articles of Incorporation with an attorney)

Managing the business and regulating the affairs of the corporation;
Defining limiting and regulating the rights, powers and duties of the corporation, its officers, directors and shareholders;
Authorizing and limiting the preemptive right of a shareholder to acquire shares whether then or thereafter authorized;
An estimate, expressed in dollars, of the value of all the property to be owned by the corporation for the following year (wherever located)
An estimate, expressed in dollars, of the value of the property to be located within Illinois during the same year;
An estimate, expressed in dollars, of the gross amount of business which will be transacted by it during the first year;
An estimate, expressed in dollars, of the gross amount thereof which will be transacted by the corporation in Illinois for the first year.

3. Corporate Action. superseding any provision of the Illinois Business Corporation Act that requires for approval of corporate action a two-thirds vote of the shareholders by specifying any smaller or larger vote requirement not less than a majority of the outstanding shares entitled to vote on the matter and not less than a majority of the outstanding shares of each class of shares entitled to vote as a class on the matter.

4. Limiting Director Liability. A provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, provided the provision does not eliminate or limit the liability of a director for breach of duty of loyalty to the corporation or its shareholders, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or for any transaction from which the director derived an improper personal benefit.

5. Other Provisions. Any provision under the Illinois Business Corporation Act is required or permitted to be set forth in the Articles of Incorporation or the corporation's by-laws. The Articles of Incorporation need not set forth any of the corporate Powers enumerated in the Illinois Business Corporation Act.

6. Duration of Corporation. The duration of the corporation is perpetual unless otherwise specified in the Articles of Incorporation.

Illinois Registered Agent, Inc.

Concept, structure, name... What next? Taxing Issues!

You have your concept, you've thought about your tax structure and you know what type of entity it is you want to form and have reserved the company name with the Secretary of State. Now, you say, what's next...

So far things have flowed pretty easily, or have you forgotten something... It is easy to get so involved in the start-up details that you completely forget about what to expect when you have that first sale.

At least that is where I was at. I was so focused on my visibility on the web that I completely forgot about the basic function of accounting. I was not 100% certain that I would ever get anyone to look at my site let alone make that first sale. You will make that first sale... Believe me...

You will need a bank account and an EIN number (employer identification number) for tax purposes. Sole proprietors can use their social security number as a tax identifier, but I would suggest applying for an EIN to avoid co-mingling your money with your company's. In the long run, it will make your year end accounting less painful. You can find out about EIN numbers by following this link to the IRS website: http://www.irs.gov/businesses/small/article/0,,id=98350,00.html . The IRS also has a fill-able SS-4 Form that you can fill out and file in a matter of minutes to retrieve your EIN number.

You will need this EIN number for your bank account and tax filings. You will need to specify whether or not you intend to have employees on your EIN application. They will also ask your intended business start date and how you are to be taxed (S-Corp, C-Corp, Partnership or as a disregarded entity -sole proprietor). The Department of Revenue will be notified by the information you provide on the EIN application as to employees and will contact you by mail with their tax and filing requirements. You should take the initiative and be ahead of the game by contacting them first. They will give you an indication as to how they would assess your employer situation. Follow this link to the Illinois Department of Revenue website: http://www.revenue.state.il.us/ElectronicServices/Businesses/index.htm.

The Illinois Department of Employment Security is another taxing body that you will need to get your head around if you are going to have employees. I found this pamphlet from IDES to be a useful informational tool: http://www.ides.state.il.us/pdf/employers/FastFacts.pdf. Lastly, check with your local municipality to see what their requirements are. The City of Chicago makes everyone jump through a multitude of hoops, some local villages and townships do the same, either way, you should ask what is required whether you have a brick and mortar business or an on-line business.

Illinois Registered Agent, Inc.

Reserve Your Company Name!

Let's review: You've had an epiphany! The company name is absolutely obvious and available! Tax thing still kind of boggles the mind and you are still undecided as to your company's structure... The one thing you are sure of, and you know in your heart of hearts that the name you have chosen is the perfect name for your business. It says it all....

Then, by all means, reserve your company name with the Secretary of State so that no one else sneaks up and takes it while you are pondering what to do next. It will not matter at this point what ending (Corp, Inc., LLC) you finally decide to go with., because the State will cross reference that name with existing corporations and LLC's and once the name reservation is filed, it will effectively block anyone from using that name for 90 days. This gives new entrepreneurs some additional time to organize their thoughts.

OK, you say, but what if your name is not available and you absolutely have to have that company name? I would choose a name that is similar to your chosen name, then adopt an assumed name for business use. Of course, any additional filings you make with the State will cost additional money, so if you are working on a shoestring budget, I would suggest finding a name that really trips your trigger, but is available for use with the Illinois Secretary of State.

If anyone is having difficulty in preparing any of your Illinois forms, I am well versed in Illinois formations and can offer assistance. Go to my website and email me. I am sure I can assist you.

Illinois Registered Agent, Inc.

To incorporate or not to incorporate: Taxing Considerations

So, at this point you have decided on a name. Now, what about the ending? Corp, Co., LLC, Ltd... and what does it matter anyway....

Well, it could make a huge difference to you depending on the type of business you have, how susceptible to liability is your company and its products, how many partners or investors are involved in the decision making process and/or whether you are going to be a sole proprietor. This decision will ultimately be a tax based decision.

Corporations are considered individuals in the eyes of the IRS and generally takes the same deductions and pays taxes on net income or loss the same as a sole owner would, however, any profits that are made by the corporation after expenses and taxes, get distributed to shareholders who then must declare that income on their individual income tax returns and pay tax again on the profits that the corporation has already paid taxes on. So, in reality, any remaining profit after loses and taxes of the corporation, gets taxed again through the shareholders. Furthermore, shareholders can not deduct any of the corporation's loss on their individual income taxes.

S-Corporations are a bit different as they can avoid double taxation if they meet IRS requirements and file additional forms with the IRS within an allotted time frame. S-Corps are exempt from federal income and are treated much the same as a partnership. S-Corps are taxed on some capital gains and passive income. Shareholders include their share of the company's income and loss, deductions and credits on their own personal income tax returns.

Taxation on limited liability company's depends on how many members or managers the company has. If there is only one member, the company can be considered disregarded in the eyes of the IRS and file taxes under the sole member/manager's social security number. The company can decide whether to obtain an EIN number for tax purposes. If the limited liability company has multiple members/managers, the company can choose to be taxed as either a corporation or a partnership - an EIN (Employer Identification Number) at this point is necessary.

Needless to say, this is something that should be discussed with someone who understands your finances, the company's potential or weaknesses and can give you various tax scenarios to consider.

Illinois Registered Agent, Inc.

So you've got this great idea...

One morning you wake up and jump out of bed with this amazingly perfect idea for a money making business. You have already decided on the most perfect and catchy name for the company that says it all.... You are all gun-ho and you belly-up to the computer to research where to start. Before you begin preparing documents to legally form this business, check the company name with the Secretary of State. There is nothing as disappointing as finding out upon filing of the formation documents that the name of your company is not available for use.

The first thing you should do when you have a bu sines epiphany is check the name availability with the Secretary of State prior to setting up the company. It is the first thing you should look into, because if the name you want to identify your business is not available, you may want to use a d/b/a (doing business as). So, your first step should be to check name availability and if need be, reserve the name with the Secretary of State to hold that name until you are ready to file all of your formation paperwork.

If you intend to have a web presence, I would suggest checking domain name availability as well. Also, you should do a search on the major search engines (Google, Yahoo, MSN) for your product description to see what your competitors names are and how many of them are out there. It would be ideal to have your web reflect the same business name as with the state. Sometimes you have to adjust your company name to what is available. That is one of the reason's why I chose Illinois Registered Agent, Inc. the name has many variations on the web, but in my case, this is exactly what my business is.

Illinois Registered Agent, Inc.

Mother of Invention

Whoever said that necessity was the mother of invention, really knew what they were talking about. After many months of sending my resume out into the electronic big black hole drove me to do something that I could actually see and monitor - my own online business. It is in effect, like building a business plan, because it makes you look at all of the information that would be contained in a business plan that insures your effectiveness in the market chosen. Any business plan out there would be good to look at to get an idea as to what you will need to consider when building a website. I am not an expert on this, on the other hand, I am a relatively knowledgeable with forming companies, what is required by statute to be a viable business in the eyes of the Secretary of State of Illinois, and have a ton of experience with their paperwork, processes and quirks. I intend to go through their procedures piece by piece for anyone who may be interested in learning about Illinois business formations.

As for my website, I need to take my own advice and pull a business plan and revamp my site to address all of the things I did not think of. So keep an eye on my site, I will be updating and tweaking continuously. Check me out!

Illinois Registered Agent, Inc.