Responsibilities after a Corporation is set up

n connection with the incorporation of a business, a licensed attorney should have performed the following legal services for you:
Prepared Articles of Incorporation containing the following provisions:

-Name of Corporation - Alternate names of Corporation -name director 1- Address: name director 2- Address: - Aggregate # of shares: 1,000 --Value of shares $1.00 --registered agent: --address of registered agent --engage in the business of...Any legal purpose

PREPARED correspondence and fax to Capital Information Service PO Box 2041 Trenton, NJ 08607 with request for immediate incorporation

Review filed Certificate of Incorporation

Review corporate kit with book and seal

PREPARED Minutes and By-Laws for corporation including the following:

--commencement date --hour of meeting including a.m./p.m. --date certificate of incorporation filed: --bank name: --address of principal place of business: --number directors written out (e.g., three): -number of directors to call special meeting written out: -number of days oral notice for special meeting written out: -number of days written notice for special meeting written out: --number of directors for quorum written out: --name and address of location where first meeting held -- name and address of location where annual meeting will be held:

PREPARED MINUTES OF ORGANIZATIONAL MEETING OF FIRST BOARD OF DIRECTORS

PREPARED WAIVER OF NOTICE OF MEETING OF BOARD OF DIRECTORS

PREPARED ACKNOWLEDGMENT OF ATTENDANCE OF FIRST MEETING OF BOARD OF DIRECTORS

PREPARED ORGANIZATIONAL RESOLUTIONS ADOPTED BY BOARD OF DIRECTORS

PREPARED MINUTES OF FIRST MEETING OF SHAREHOLDERS

PREPARED WAIVER OF NOTICE OF MEETING OF SHAREHOLDERS

BENEFITS OF A CORPORATION: Setting up a Corporation will provide the officers with certain protections if they keep up all their corporate status. In a corporation, the liability of the owners is limited to the amount they pay for their shares of stock. The names of the stockholders are also private from the public. A corporation is a legal entity, and its continuity is unaffected by death or the transfer of shares of stock by any or all owners.

A major disadvantage of most corporations is double taxation on corporate profits and the dividends after they are paid to the shareholders. Another drawback is that tax losses, such as from depreciation, usually can-not be passed through to the stockholders.

In an "S" corporation, a special "election" is made so that profits are passed through to the stockholders with no Federal income tax (IRS) to the corporation as an entity. Some states, such as New Jersey, do not recognize "S" corporations for New Jersey state tax purposes. There are many advantages and restriction on the "S" corporation election. Your accountant can explain the following assets, taxes and employee benefits analysis.

C Corporation

Advantages l. Tax deferral @ l5% first $50,000 of income 2. Medical Insurance is deductible 3. Group term life insurance is deductible

Disadvantages l. Maximum tax rate is 34% 2. Double taxation 3. Favorable liquidation tax treatment is no longer available resulting in double taxation.

S Corporation

Advantages l. Single level of federal taxation 2. Single level of taxation upon sale or liquidation of business

Disadvantages l. Medical and group term life insurance is not deductible

HOW YOUR ATTORNEY CAN HELP YOU AND DOCUMENTS WE CAN PREPARE OR REVIEW FOR YOU:

l. Prepare Corporate Resolutions each time major decisions must be made 2. Review franchise agreements 3. Prepare/Review buy-sell agreements 4. SS-4(Federal) application for Employer Identification Number 5. Provide specific legal advice 6. Prepare and File Certificate of Change of Registered Agent 7. Revise By-Laws 8. Revise meeting of shareholders documents 9. Prepare and File Trade Name Certificate with County Clerk if requested l0. Prepare Shareholders/ Stockholders Agreement ll. Prepare Agreement of Sale l2. Prepare Promissory Note l3. Prepare and File Annual Report to Secretary of State l4. Prepare/Review lease agreements or purchase agreements

Each year the affairs of small businesses become more and more complex as government regulations and tax law changes increasingly affect their operations. Probably the best way for a business, whether it is a proprietorship, partnership or corporation, to comply with all laws, regulations or rulings is to meet with your attorney near the end of each fiscal year. Certain questions must be answered, including but not limited to:

l. Is the minute book up to date? 2. Are the minutes signed? 3. Do the minutes reflect the following?

a. Annual shareholder's' meeting? b. Annual directors' meeting? c. Special meetings? d. Retirement plan contributions? e. Bonuses? 4. Are stock certificate books properly up to date? 5. Are by-laws properly up to date? 6. Are proper records of expense reimbursements being kept?

You should have your accountant advise your attorney in writing to confirm the following questions are taken care of:

7. Has corporate tax been estimated? 8. Have deposits on federal and state taxes been paid? 9. Are there any earnings accumulation problems? l0. Have state and federal tax returns been prepared? ll. Have all tax returns been filed on time? l2. Should a subchapter S election be made or recorded? l3. Are proper depreciation guidelines being followed?

CALL YOUR ATTORNEY WITH ANY LEGAL ISSUES

As an owner or officer of a business, you must see that all necessary steps be taken in order to protect your business and to finish necessary transactions before the end of the business' fiscal year. You should discuss these duties with your attorney, plus discuss the advisability of contemplated transactions.

As a free additional service to clients, the Kenneth Vercammen & Associates, PC law office will hold your file in storage for seven years. We will also continue to provide you with updates on certain recent changes in the Law. We look forward to helping you and your family in the future. To improve our service to clients, we hope you can fill out the enclosed Client Questionnaire and return it to our office in the stamped, self-addressed envelope.