Since a principal function of the Secretary of State of the various states is the formation of new business entities, we present common concerns which are normally associated with corporations (or limited liability companies), whatever the state (and regardless of whether or not that particular state follows the normal practice of entrusting these matters to the Secretary of State):

CONSIDERATIONS IN FORMING A CORPORATION :

Securities Laws, Proper Formation Issues

Pleasing the state agency responsible for corporation filings is only part of the battle: a new entity, even if its articles are filed by the state agency, must comply with the state securities ("blue sky") laws, which are almost always administered by a different state agency, before issuing its stock to the stockholders or membership interests to the members. Moreover, clearance by these state agencies is no guarantee that what has been done will pass muster in the courts in the event of litigation between private parties. Courts occasionally disregard the corporate entity and find the participants individually liable for company debts, or find that the participants have civil (or perhaps even criminal) liability for violation of the securities laws.

Taxation

Notwithstanding references to "C corporation" or "S corporation", there is really only one kind of for-profit, state-formed corporation. Incorporator(s) file Articles of Incorporation (generally speaking, although the exact name may differ in the various states) and pay the requisite state fees and prepaid taxes with the appropriate state agency to form a corporation. Whether that corporation is taxed like a "C corporation" or taxed like an "S corporation" is wholly dependent on whether or not an S corporation election is filed with the IRS. If it is not, the corporation is taxed like a "C corporation".

Separate Legal Existence

A corporation which is properly formed and maintained has separate legal existence distinct from its stockholders.

Stockholders

Stockholders own the corporation and elect the directors. Although the Board of Directors generally makes important decisions for the company, there are a few matters, considered particularly important, where shareholder approval is required.

Aside from these matters, corporation management is normally vested in the board of directors. Directors set policy regarding the corporation but do not run the business on a day-to-day basis, which is the function of the officers and employees. Such officers and employees have such authority as the directors give them.

Corporate Officers

Corporate officers are elected by the Board of Directors and are responsible for conduct of the business activities of the corporation. The directors may normally select officers of their own choosing, and delegate such duties as they see fit to those officers, but the corporation officers normally are President, Vice-President, Secretary, and Treasurer.