A corporation is a separate business entity that conducts its own business, files its own taxes, and signs its own contract in its own name. Let’s look as John Doe as an example. If John owns John’s Plumbing Company Inc., his company should file taxes as John’s Plumbing Company Inc. rather than John Doe.
A corporation is formed in Ohio by the filing of the Articles of Incorporation with the Ohio Secretary of State and paying the required filing fees. Although this is everything that is technically required, this is far from all one should complete when starting a business
Corporate bylaws, although not required, are generally recommended when starting a corporation. Corporate bylaws are the rules of your corporation that govern the internal operations of your company. If your company does not have corporate bylaws, then Ohio law determines what is included in your corporate bylaws. Often, our clients discover this is not what they want and seek our counsel in establishing their corporate bylaws by agreement.
Although establishing corporate bylaws may not be required, they are beneficial in case an ownership dispute arises among business partners. Corporate bylaws go a long way toward resolving a dispute by having a reliable agreement in place.
In addition to having corporate bylaws, a company should also record all corporate decisions, and at a minimum, have a written record of annual corporate minutes. Failure to have a written record of all corporate decisions can result in the shareholders being held personally liable.
Finally, if you ever anticipate raising capital for your business, whether that is through angel capital, venture capital or by bringing on an additional business partner, you should make sure that you have an established set of corporate bylaws.
This may seem like a tough task just to start a business, however, do not let the legal details discourage you. Taking care of the legal aspects of your business is much less expensive than hiring an attorney after a legal issue has already occurred. Therefore, many people find it beneficial to hire our office as their General Counsel.
For more information:
If you have a legal question regarding your business or you are interested in retaining our office as your General Counsel, please contact our office at (513) 241-0400 or visit our website to schedule an initial consultation.