I had an interesting meeting with a new client of ours a few weeks ago to talk about their corporation. The first half of the meeting was spent clarifying exactly what a corporation attorney actually does, here’s what our client learned and found useful…
In the Eyes of the Law, a Corporation has Three Different Sets of Players
One of the common misunderstandings about what a corporation attorney does is that the corporate attorney represents the corporation and not the individual shareholders who are the owners of the corporation.
For many small business owners, this is very confusing. The question comes up, “How could you represent the corporation and not represent me? I am the corporation”
- There are the owners of the corporation who are the corporate shareholders.
- There are the managers of the corporation who are known as the board of directors. It is the board of directors that designs the overall vision of the corporation on behalf of the shareholders.
- Then, there are the folks who take care of the day-to-day operations of the corporation. These people are known as the officers. They have titles such as the president, secretary, and treasurer.
In most small business corporations, the shareholders, the directors, and the officers of the corporation are frequently all one and the same person or people. This is where it gets confusing.
A Corporation Attorney Looks After the Interests of the Business
When a lawyer is doing work on behalf of the corporation, he is looking after the interests of the business.
He is not looking after the personal interests of the officers, the directors, or the shareholders. So when we talk about the “corporation attorney”, this is quite accurate because the truth of the matter is we are representing the business.
So what does a corporation attorney, or as most people refer to it a corporate lawyer, actually do for the business? Our firm becomes the trusted advisor for the business.
Advice is given to the business regardless of who is serving as the officer or the director at the time. You could think of this corporate lawyer as the family doctor. The family doctor takes care of the ordinary and routine matters that come up in the health of the corporation. However, when a special problem arises, the corporate attorney will frequently refer the matter out for assistance by another legal specialist.
Initial Incorporation and the Corporation Attorney’s Role
The corporate attorney will do all of the initial work for the corporation like filing the articles of incorporation, drafting the minutes of the incorporator, drafting minutes for the first meeting of the board of directors and shareholders, preparing the stock certificates, and drafting a shared ledger.
The incorporation attorney will also deal with governmental entities on behalf of the business. In our firm in Orange County California, our corporate lawyers also act as the initial contact with the Internal Revenue Service. Our corporate lawyers will apply for and obtain a federal employer identification number (“FEIN”) for the company. The FEIN is required to open up a bank account for the corporation and for the corporation to be able to ultimately account for income earned to the federal and state governments.
The Corporation Lawyer will also Make Introductions to other Key Advisors.
- One of the first key advisors that a new corporation needs to obtain is a trusted business banker.
At the Incorporation Attorney, our corporate attorneys would send over a package of information including a copy of the articles of incorporation and corporate resolutions to:
- Open up a new bank account
- A certificate of incumbency establishing the people who will be filling the official positions within the corporation such as the officers and directors.
The bank will utilize this package of information in order to complete the account opening process.
- Another one of the critical introductions that the lawyer for the corporation would make would be to a certified public accountant (“CPA”) and/or tax preparer.
Our firm of Orange County corporate attorneys has special relationships with a variety of local Orange County CPAs who are familiar with the preparation of tax returns for small business corporations. Not all certified public accountants and tax preparers have experience with small business corporations. So, it is very important to have somebody that has a high level of competence and familiarity with the needs of a small business corporation.
The corporation attorney would send to the tax advisor of the corporation a package of information that would contain all of the documentation necessary for the accountant to be able to properly prepare the corporate tax returns for the small business corporation.
- The last critical business advisor that the corporation attorney would bring into the business would be an insurance broker.
Small Business Owners Forming Corporations and Liability Protection
Small business owners who choose to form corporations frequently are concerned about protecting themselves in the event that something unfortunate occurs within their business and a party is damaged or injured.
Having proper corporate documentation from the start of the business and updating the annual corporate records, is a key fundamental to the liability protection offered by incorporating.
Our corporation lawyers have close personal relationships with many insurance brokers who have experience in many different types of business.
The insurance brokers who are familiar with dealing with small business corporations are aware of all of the risks that a small business corporation is likely to face. The insurance brokers are thereby able to provide forms of insurance coverage that make sure the business owner can sleep safely at night knowing that they have minimized the risks as much as humanly possible.
Are you considering Creating a Small Business Corporation?
If you are looking for a:
- Corporation attorney to create a new corporation for your small business
- Or if you are looking for guidance from skilled Orange County business lawyers to give guidance to a more mature small business corporation
Please give us a call at 714-634-1414 and or visit us at our offices in Orange County, California.
Related:
Selling an Existing Business?
- Thinking of selling your business?
- Need a business broker but are not sure where to start?
Consider working first with an impartial exit planning company. Business brokers just like realtors benefit when they enable a sale not necessarily by getting you the best deal. Or even in advising you regarding the best strategies for making your business highly salable.
What Are the Downsides of Working with A Business Broker to Sell Your Business in Baltimore?
Obsidian Business Planning Solutions 2099 Gaither Road Suite 110 Rockville, MD 20850 301-990-4395
