Ohio Corporations: Incorporating in Ohio
Ohio Corporations
The decision to start a new business is a daunting one. Developing a business plan, obtaining financing and creating a marketing strategy are crucial steps in initiating a successful business venture. Obtaining sound legal advice is equally important or more crucial than these other necessary steps. Choosing the right business entity and setting it up properly at the inception of the business can not only protect one’s individual assets from corporate creditors, but can help avoid potential serious problems down the road if unforeseen events occur, like a falling out among co-owners, death of a co-owner or divorce.
Many different types of business entities exist. Many small businesses choose to operate as a corporation or a limited liability company in order to shield one’s assets from corporate creditors. It is crucial that one set up and operate one’s company properly in order to achieve this personal asset protection, or a creditor may be able to “pierce the corporate veil” or look to the owner’s personal assets to satisfy debts. Should liability issues not be a concern, sole proprietorships and partnerships are also possibilities.
In setting up one’s business, proper paperwork must be filed with the Secretary of State. A federal tax ID number may be necessary or advisable. Certain legal documents must be prepared to not only set forth the regulations and rules of the corporation or a limited liability corporation (LLC) but also the relationship of the owners of the business. Vendor’s licenses may be necessary. With a corporation, stock certificates should be prepared, directors should be elected, and officers of the corporation should be elected as well. Although many corporations fail to do so, this information also needs to be updated on a yearly basis. Maintaining these proper corporate formalities is critical in establishing the corporation as a separate entity and protecting one’s personal assets from corporate creditors.
Avoid Potential Problems, Setup Agreements For Ohio Corporations
An agreement among co-owners, called a buy/sell agreement, is absolutely necessary to avoid potential problems or disputes in the future. What if one co-owner wants to sell his or her interest in the business? Should the other co-owner or co-owners have the right of first refusal to purchase the interest? If so, how is the value of the ownership interest to be determined? If one co-owner dies, should the other co-owners have the right to purchase the deceased owner’s share from his or her estate? Should the surviving co-owners be obligated to purchase the deceased owner’s share? Should life insurance be obtained in order to facilitate such a buy out? All of these possibilities need to be addressed in order to avoid possibly co-owning a business with an unwanted partner or partners.
In addition to setting up the corporation, maintaining the legal status of the corporation is vital. This includes updating minutes on a yearly basis, documenting in writing necessary corporate resolutions, and the proper preparation and review of business and employment contracts. By properly setting up one’s business and reviewing it with one’s legal advisor on a yearly basis, the business owner or owners can avoid unnecessary and unwanted surprises in the future.
Please don’t hesitate to call us at (937) 293-2141 or email us by using our form below if you are considering starting a new business. Additionally, we have an emergency phone number, (937) 760-4357, that is answered by one of our Ohio corporations lawyers around-the-clock. Please contact us so we can help you evaluate the legal implications.
