The information below is a general description of why and how to form a Mississippi corporation. Later we will talk about the different types of corporations such as S, non-profit, and foreign corporations. Future posts will also address other forms of businesses such as a sole proprietorships and partnerships.
Incorporation denotes the legal process in which a business receives government authorization to function autonomously as a separate and distinct legal entity from its owners. In fact the word "corporation" derives from corpus, the Latin word for body, or a “body of people”.
Many people incorporate their business in order to protect their personal assets from liabilities such as creditors or lawsuits. In order to enjoy maximum liability protection from lawsuits, the company or corporation must be established, operated, and maintained properly in accordance with state law. Protection is not automatic. Legal protection is only enjoyed by a corporation that has been formed precisely according to legal statute. When incorporated, the business remains limited to your amount of investment in it. In other words, even if the company fails, your personal assets remain secure.
Other advantages of being a corporation include a perceived level of prestige and reputation for stability corporations seem to have. Such respect many times translates into more business. Customers and other businesses usually feel more secure engaging in transactions with a corporate legal entity because it instills a feeling of confidence in the company. For investors in and lenders to a business, it gives them knowledge that their investment assets are afforded better legal protections. A corporation can also have a credit rating of its own regardless of the credit ratings of the owners or shareholders. The steps and process by which a business must go through to incorporate shows the customer that the company that has secured the “Inc.” after their company name has demonstrated their desire to be a long-standing business in the marketplace. An incorporated business may also be able to minimize tax rates. Corporations may last indefinitely, with unlimited lifespan.
To form a Mississippi Corporation you must:
· Choose a name for your Mississippi Corporation which must include the word "Corporation" or "Incorporated" or an abbreviation of one of these words. It should identify the type of products and services your business will provide. It must also be different from any reserved names on record with the state of Mississippi. Your Mississippi Corporation name must not imply that it was formed for a purpose other than that stated in your Articles of Incorporation. Your Mississippi Corporation name must not be a name that is likely to mislead the public.
· Select an official address and a Registered Agent. Every Mississippi Corporation must have an address that is physically located in the state of Mississippi. This address is "registered" with the Mississippi Secretary of State. The Registered Address is where official and legal correspondence can be delivered.
· Choose a Board of Directors for your Mississippi Corporation. All Mississippi Corporations are required to have a Board of Directors. Directors are the people who will set policies for your Mississippi Corporation and manage the business and its resources. In the majority of small corporations directors are the owners. The Articles of Incorporation or Corporate Bylaws may define specific qualifications for Directors.
· Decide who will be Officers of the Corporation. The Board of Directors elects Officers for the Corporation in accordance with the Corporate Bylaws and Articles of Incorporation. Officers handle the day to day operation of the Corporation.
· Determine how you want your Mississippi Corporation to be taxed There can be substantial advantages, and savings, available to an incorporated business. Corporations can take advantage of tax savings options that are not available to sole proprietorships or partnerships.
· Get a Federal Employer Identification Number (EIN). This is used to identify a business entity. It is like a social security number for your business and is needed to set up the corporate bank account.
· Issue Stock Certificates to the Initial Shareholders. Corporate stock is evidence of ownership of a Mississippi Corporation.
After you have formed your Corporation you must:
· Conduct an initial Meeting of the Board of Directors and adopt Corporate Bylaws.
· Open a Business Bank Account in Mississippi.
· Obtain Business Licenses from the cities and counties in which you plan to do business.
· Hold Meetings of Shareholders and Directors each year.
· File the required Mississippi Corporation reports.
· Keep proper records of your Mississippi Corporation on file.
The decision to form a corporation for your business is an important one. The above is only a general description of the potential advantages of incorporation and is not legal advice. Every situation is different and specific question should be addressed by a professional. Should you have questions, go to http://www.mckinleylawonline.com/ or email me at bruce@mckinleylawonline.com.
