Here are some answers to common questions concerning corporations:
Q. Should I consider incorporating my business?
A. People incorporate a business for a variety of reasons, including:
Q. If I incorporate, do I have to involve other people to serve on the board of directors and to serve as corporate officers?
A. It is no longer necessary in Missouri. One individual can be the sole shareholder, the sole director, and the sole officer of a corporation. The decision to involve others can be based only on what is advantageous to the company.
Q. Are there business entities that are alternatives to corporations?
A. Yes. Missouri has joined most states in allowing formation of an entity known as a "limited liability company" ("LLC"). LLC's provide many alternatives for structure, but the structure that has received the most attention allows the owners of the LLC to receive the same tax treatment they would receive if they were a partnership. However, unlike a traditional partnership, the LLC provides the owners the "shield" against liability that is offered by a corporation. In addition to the LLC, Missouri also now recognizes a "limited liability partnership," and this entity is designed to limit liability for the partners while providing favorable tax treatment.
Q. How long does it take to put a new business entity in place?
A. For both a corporation and an LLC, papers must be filed with and approved by the office of the Missouri Secretary of State. However, Checkett & Pauly can create the necessary papers in a very short period of time, and it is not uncommon for us to have formal acceptance of the papers by the office of the Secretary of State within 10 days of our initial client interview. Depending on the business entity, its ownership structure, and the scope of its activities, some of the other documents that may be created take more time. For example, owners of a corporation may want a formal shareholder agreement. Likewise, owners of an LLC often want an "operating agreement" formalized. Both of these instruments are complex and may contain clauses that must be reconciled between the various owners of the business.
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