Corporate Purpose is Any and All Lawful Business
A corporate purpose is any and all lawful business. This is the purpose that you will list in your company's Articles of Incorporation.3 min read
2. Handling Corporate Documentation
A corporate purpose is any and all lawful business. This is the purpose that you will list in your company's Articles of Incorporation. You can list a more specific corporate purpose if you want, but doing so is not required.
Forming Your Corporation
Corporations are formed by filing Articles of Incorporation with your Secretary of State. If you want your Secretary of State to approve your Articles and the formation of your corporation, you should be sure to include the correct information.
The name of your corporation is the first thing that you need to list in your Articles of Incorporation. Your name should be unique from other registered business names in your state. Make sure you aren't filing under the same name as another business by having your attorney perform a business name search. Next, you will need to state how long your corporation will exist. Because corporations are legally distinct entities, they can exist in perpetuity.
Next, list the purpose of your corporation. Include a statement that your corporate purpose is any and all lawful business. Your Articles of Incorporation must include information about your company's stock. You should state how much common stock your company plans to issue and specify the par value of each stock. You also have the ability to grant your shareholders preemptive rights to treasury shares that have not yet been issued.
Other information you should add to your Articles of Incorporation includes:
- The name of your registered agent. You should also include your registered agent's business address.
- The names of your initial company directors.
- Contact information of your incorporators.
The biggest advantage of corporations is the limited liability protections enjoyed by company owners. With a corporation, you will also be able to write off certain bills on your taxes, including dental bills, disability insurance, and benefits programs.
Handling Corporate Documentation
Corporations and limited liability companies (LLCs) are the two most common types of business entities. The formation documents for these two entities are very similar, but have different titles. To form a corporation, you must file Articles of Incorporation, and to establish an LLC, you must submit Articles of Organization. Both organizations also have documents that govern how the business is run. For a corporation, this governing document is called its bylaws, and for an LLC, the governing document is called an Operating Agreement.
The Articles of Incorporation includes basic information about a company, including the purpose for its formation. Because most companies simply list their purpose as lawful business, many people view this section of the Articles of Incorporation as perfunctory. If a corporation decides to issue additional shares of stock or wants to change its name, the Articles of Incorporation must be amended. Authorizing shares does not indicate the corporation's ownership. After authorization, the corporation would still need to issue these shares.
Corporate bylaws are almost as important as Articles of Incorporation. The bylaws function as a corporation's constitution, outlining how the business will be operated. With your bylaws, you can designate the location for your corporate offices, the rights of your shareholders, and what your officers and directors can do within the company. You can also outline how many shareholders are necessary for a quorum.
Stockholders are the actual owners of the corporation, but they generally are not involved in the business's daily operations. Instead, officers and directors will be responsible for running the business and will need to regularly meet to discuss these operations. Officers usually have the most involvement in the organization, as they are also employees of the business.
When you are drafting your corporate bylaws, you must give a great deal of consideration to how you want your business to be run. If you overlook this important fact, your bylaws may end up being too restrictive.
After forming your company, you need to hold an initial meeting of your shareholders. During this meeting, shareholders will approve your Articles of Incorporation and will also elect a board of directors. You can also discuss and adopt your bylaws during this meeting. The issuance of company shares will also be authorized during this meeting.
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