Board Certified, Estate Planning and Probate Law - Texas Board of Legal Specialization
Av Preeminent rated, Martindale Hubbell
In Japan people say it's so easy to form a corporation in the U.S. at low cost.
Some form a corporation in U.S. for many reasons: To start up an internet company, bar & restaurant, tax shelter, holding real estates, investment company, etc. without giving enough thought to consequences of having established and the need to maintain a business entity in the U.S.
It may cost less to form a business entity in U.S., but that certainly should not be translated to "Operating a company is easier in U.S. than in Japan."
Once you form a company in U.S., it is a U.S. company. You are subject to the U.S. laws, regulations, and rules. You are expected to act like a U.S. company. Failure to do so may cost you more than you ever imagined.
This article considers the first of these items.
Consider the followings:
If the liability is founded on contract, you may be able to
limit your liability to the corporation itself. However, many
entities doing business with you
will require a personal guarantee in additional to the underlying corporate liability, which makes the guarantor personally liable.
In addition, personal liability may depends on what type of law gives rise to the liability. Under certain circumstances, you may be liable personally regardless of whether you have created a limited liability entity such as a corporation. For example, certain types of copyright infringement may give rise to both personal and entity liability, as do certain failures to tax required actions under the tax codes.
You should also consider whether an entity other than a regular business corporation is preferable to accomplish your objectives. Some entities which should be considered include:
A final non-legal factor might be the type of image you wish to create, which will be most useful when talking to a commercial bank, investment bankers, business representatives, etc.
Observing required formalities is essential to enjoy the benefit of doing business as a corporation. Failure to observe required formalities can expose principals to potential liability. The basic formalities involving corporate records which should be maintained require maintenance of the corporate records in a minute book. Such consolidated records accomplish the following:
As a basic checklist, you should consider whether you have the following documents in your minute book:
Of course, the minute book must be updated regularly, at least annually, an preferably each time an action requiring a formal record is taken.