Forming a legal corporation is one way to take your business to the next level. This type of structure is especially beneficial for small businesses in a growth pattern since, as Franklin, Tennessee business lawyer Brian T. Boyd points out, it limits the financial liability of the business owner. We recently sat down to chat with Mr. Boyd, who generously offered insight on the process of forming a corporation in Tennessee.
Q: When does it make sense to form a corporation?
Brian T. Boyd: I think it is a wise choice any time a business owner wants to separate their personal assets from those of their business. When your business goes from sole entrepreneur to corporation, you have some protection if your efforts fail. You are less likely to lose your home, car, and personal cash reserves.
Q: How does a business owner begin the process?
Brian T. Boyd: I would first start with consulting a business lawyer. In Franklin and the surrounding areas, this person can assist with ensuring the business name is registered correctly with the state. Further, an experienced attorney will know how and when to file the charter.
Q: What is a charter?
Brian T. Boyd: This is simply the document needed to launch the corporation as a legal entity. It contains information such as the business name, stock structure, address, a statement of profit-seeking status.
Q: Can a business keep the name it launched with?
Brian T. Boyd: Often, yes. However, the name must be available in the state of Tennessee. A Franklin business lawyer can help with determining if the preferred name is available. They do this by searching the Secretary of State’s website. If it is not a usable name, the business owner must use something else. Additionally, the full legal name must contain “company,” “corporation,” or “incorporated” in the title. Abbreviations of these are also acceptable.
Q: What is an incorporator?
Brian T. Boyd: This is the person, usually the business’s founder, that files the charter.
Q: What is the difference between a registered agent and a director?
Brian T. Boyd: A director is an individual appointed to a role of responsibility within a corporation. Many companies have multiple directors, which sit on a board and make decisions about the business’s operations. A registered agent is the designee for official correspondence. It is not uncommon in Franklin for a director to also be a registered agent. A business lawyer can explain more regarding the roles of each title.
Q: How does an incorporator draft bylaws and a corporate purpose?
Brian T. Boyd: In Tennessee, a business owner is not required to create a specific corporate purpose. By default, their purpose is to engage in lawful for-profit business operations. Bylaws are also not heavily regulated, although they must be adopted by the corporation, and they have to be consistent with local laws and the initial charter.
Q: How much does it cost to incorporate a business in Tennessee?
Brian T. Boyd: Currently, the cost to file a charter is $100. Further, businesses are required to pay state and federal income taxes. In addition to these, companies are not exempt from paying property taxes in Franklin. A business lawyer and an accountant can help individual business owners determine their estimated taxes, operational costs, and other expenses.
For more information on Franklin-based business lawyer Brian T. Boyd, visit BoydLegal.co.
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