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- A signed list or section that is added to a document, contract, letter, etc.
- A signed statement that is added onto a document so as to add, delete and/or revise it.
- Annual Report:
- A simple report listing Officers and Directors of a Corporation and making any payments required to be filed with the Division of Corporations annually so as to maintain the Good Standing status of the Corporation. The Annual Report may be mailed or completed online.
- A certificate of notary, issued by the Secretary of State, to authenticate documents that are required by certain countries which accept the terms of the Hague Convention's international treaty.
- Articles of Formation:
- (Sometimes referred to as the "Articles of Organization" or a "Certificate of Formation", depending on the state involved) - A document that is required by law with the registration of a Limited Liability Company (LLC) (including the name and address of its Registered Agent).
- Articles of Incorporation:
- (Sometimes referred to as a "Certificate of Incorporation", depending on the state involved) - A document, conforming to state law, that must be filed with the state where the Corporation is formed and state the purpose of a particular Corporation, the name of the Corporation, the Registered Agent's name and address, and details involving stock types and amounts that are to be authorized.
- Articles of Organization:
- (Sometimes referred to as the "Articles of Formation" or a "Certificate of Formation", depending on the state involved) - A document that is required by law to register a Limited Liability Company (LLC) (including the name and address of its Registered Agent).
- 1) A person or entity to whom some property or privilege is signed over; 2) a person who is appointed to act for another.
- The regulations, rules or laws of a Corporation that provide for the proper conduct of corporate meetings, elections and Officers' authority to take business actions. State Corporation statutes require that every Corporation adopt bylaws (a document not filed with the Division of Corporations in the state of incorporation). Bylaws are not applicable to an LLC because the equivalent is the LLC's Operating Agreement.
- The tax status of all Corporations, which requires filing the "Form 1120" tax return to report its income on a calendar or fiscal year basis. An LLC may elect to be taxed as a C-Corporation by filing a Form 8832. A C-Corporation may carry its losses forward or back.
- Capital Contribution:
- The cash or property contributed to a company by its owners.
- Certificate of Amendment:
- A document filed with the Secretary of State amending the Certificate of Incorporation or Certificate of Formation to add or change the provisions therein.
- Certificate of Authority:
- A document that is issued by a particular state to a foreign Corporation which grants the Corporation the right to do business in that state.
- Certificate of Cancellation:
- A document filed upon the dissolution of an LLC.
- Certificate of Formation:
- (Sometime referred to as the "Articles of Formation" or the "Articles of Organization", depending on the state involved) - A document filed with the Secretary of State to create a Limited Liability Company (LLC).
- Certificate of Good Standing:
- (Also known as a "Certificate of Status") - A document, issued by the state, that proves a company to be in existence and proves that all state taxes have been paid, authorizing it to do business in that state.
- Certificate of Incorporation:
- (Sometimes referred to as the "Articles of Incorporation", depending on the state involved) - A document, conforming to state law, that must be filed with the state and explain the purpose of a particular Corporation, the Corporation's name, Registered Agent, and details involving stock types and amounts that are to be authorized.
- Certified Copy of Filings:
- A copy (often a photo-copy) of a company's official corporate filing document(s). This copy is signed and certified by the person(s) who hold official custody of the original documents.
- Certified Uniform Commercial Code (UCC) Search Certificate:
- A certificate, produced by the state, stating the time and date the search was conducted, the name of the Debtor upon whom it was conducted and a statement. An example of the statement in a clear search would read, "The undersigned filing officer hereby certifies that there are no presently effective financing statements, lapsed financing statements, federal tax liens or utility security instruments filed in this office which name the above Debtor, as of [time and date approximately three weeks prior to the search date]."
- Continuation Statement (UCC):
- After 4 years and 6 months, a UCC Financing Statement must be renewed (before the fifth anniversary of filing) to remain active. It is renewed through a continuation statement.
- Controlled Group:
- Any parent-subsidiary or brother-sister group of related Corporations in which 50 percent or more of each Corporation is owned by the same person(s) or entity.
- Corporate Kit:
- A 3 ring, slip-cover vinyl binder that holds materials with regards to the history of a Corporation or LLC. Such documents can include, but are not limited to: company minutes, bylaws, corporate seal, stock certificates, and stock record.
- Corporate Resolution:
- A formalized statement that has been voted upon and signed by the corporate Directors and/or stockholders, typically authorizing a specific corporate action.
- Corporate Seal:
- A hand-held "raised seal" that is used to imprint the corporate name, the year of formation and the state of formation which is no longer required by law.
- A legal entity established for a business purpose with perpetual duration. It is allowed to borrow money and enter into contracts separate and independent of its stockholders. Stockholders receive profits and elect Directors who run the company through Officers (at-will employees) that conduct the day-to-day activities. The stockholders are protected by a "corporate veil" that prevents debts against the Corporation from being enforced against individual stockholders in their capacity as stockholders; this is known as "Limited Liability". The laws in the state of formation govern the internal affairs of the Corporation. The rules governing Corporations require certain formalities be followed so as to comply with local laws. These include annual meetings, among others.
- Court of Chancery:
- A court which has jurisdiction over affairs related to corporate equity and injunctive relief. Most business cases in Delaware are decided by this court, which has a reputation for fairness and competence unparalleled in the United States. Expedited remedies are available and none of the cases are subject to juries.
- A person to whom money or an obligation is owed by a debtor. The creditor may be the holder of a financing statement who has a lien against the assets of the debtor.
- D.B.A. ("Doing Business As"):
- Any name that is used by a Corporation, LLC or Partnership, which differs from the name that was registered with the Secretary of State.
- D.C.I.S. (Delaware Corporation Imaging System):
- The online mainframe computer used to file and store Delaware corporate and UCC records.
- A person who owes money or an obligation to a creditor. A debtor may secure the debt to a creditor against moveable property and intangible property by filing a UCC financing statement.
- Delaware LLC Act:
- (6 Del. C. 18-101 et seq.) This Act is the law which governs LLCs in the State of Delaware. The internal affairs of an LLC formed in the State of Delaware are governed by the Act. Every LLC is required to have an LLC Operating Agreement - a private partnership agreement, usually in writing, signed by the members of an LLC - which often contracts around the default provisions in the Act (that governs in the absence of an agreement to the contrary).
- Delaware's Charging Order Remedy:
- The court order which converts a Member's LLC interest into a non-voting economic right belonging to a Member's creditor.
- Direct Hit Trademark Search:
- A trademark search of the US Patent and Trademark official records and the records of all 50 states' trademark databases. It does not include a "common law search" of telephone directories, but does include some "truncated versions" of the name searched so as to help locate confusingly similar names and not simply identical name filings.
- The pre-trial phase of a lawsuit in which each party can request and receive certain information from the other parties. This phase also allows for the usage of subpoenas, depositions and interrogatories (written questions).
- The formal procedure to wind-down the operations of a Corporation.
- To terminate/end the existence of a Corporation.
- Distributions of a company's earnings to its owners/shareholders.
- The process by which a non-US based company changes its domicile to Delaware so as to be governed under Delaware law. The process is a two step process which first forms a new Delaware Corporation or LLC and second merges the non-US entity into the new Delaware entity.
- Double Taxation:
- The term used to describe the taxing of C-Corporation's earnings at both the corporate level, and again to the shareholder personally when shareholder dividends are distributed.
- E.I.N. (Employer Identification Number):
- The Taxpayer ID # which is the corporate equivalent of a Social Security Number (SSN) for an individual. This number is assigned by the I.R.S. to Corporations and LLCs when requested by filing a Form SS-4.
- Financing Statement:
- A document (UCC Financing Statement) that is filed with the Secretary of State. It details the personal property of the creditor or lender (the person that filed the document) that is secured against the debtor or borrower.
- Fiscal Year:
- The 12 month period, elected by owners of a C-Corporation, to coincide with their company's business cycle (often other than the calendar year).
- Foreign Qualification:
- The corporate filings of out-of-state Corporations or LLCs that enable the company to do business in that particular state (i.e. a Delaware Corporation headquartered in California files a Certificate of Authority to qualify as a foreign company in California).
- Form 1023:
- The I.R.S. application form required to be filed by a Non-Profit Corporation to obtain a tax-exempt determination (such as Section 501(c)(3)) letter from the IRS.
- Form 2553:
- The I.R.S. form which is filed to elect the S-Corporation Status by a Corporation or LLC within 75 days of the beginning of the calendar year or within 75 days of the business formation. Some states require a separate election.
- Form 8832:
- The I.R.S. form required to elect that an LLC be taxed as a C-Corporation.
- Form SS-4:
- The I.R.S. form which is filed in order to obtain an Employer Identification Number (E.I.N.).
- General Corporation:
- A For-Profit Corporation which has stockholders who elect Directors, who in turn appoint Officers.
- Good Standing:
- A term used to describe an entity which has satisfied state corporate or LLC law requirements such as filing all the necessary reports and documents, having a Registered Agent (Resident Agent) and being up-to-date with regards to all penalties and fees owed to the state.
- Hague Convention:
- A treaty signed by certain countries which simplifies the process of authenticating local documents for use in other countries. The State of incorporation can apostille certain documents directly without filing the documents with the national government. Non-signatory countries must authenticate through the US Department of State and their local consulate in the United States.
- Holding Company:
- An asset-holding company with a virtual office in the State of Delaware with the intent to create a Tax Situs (tax haven) in Delaware.
- Where the trademark applicant files a mark before he has used the mark in commerce, but with a bona-fide intent to use the mark in commerce within a certain timeframe after it has been approved for publication and prior to registration.
- International Authentication:
- The process to legalize documents for international use in countries which are non-signatories of the Hague Convention.
- LLC (Limited Liability Company):
- An entity that is owned by Members, operated by Managers and run by an Operating Agreement. The LLC with one Member is a Sole Proprietorship or with more than one Member is a Partnership has the tax status of a Pass-Through Tax Entity. It is well-suited for holding investment assets such as real estate.
- LLC Units:
- These represent ownership interests in the LLC. LLC members do not have "shares of stock", but rather receive Units/Interests that collectively equal 100% ownership in the LLC. Units may be in different classes, such as voting and non-voting.
- LLLP (Limited Liability Limited Partnership):
- The LLLP is similar to a traditional Limited Partnership (LP) where the ownership is divided into two categories: Limited Partners (passive investors without management authority with limited liability) and General Partners (Managers). In an LP the General Partner has personal liability. The difference, however, in an LLLP is that the General Partner has limited liability, not personal liability. Modernly, after the development of the LLC Act, most prefer the simplicity of the LLC to the complexity and higher annual state fees of the LLLP.
- LLP (Limited Liability Partnership):
- A legal entity which is a form of Partnership. Each partner is 100% personally liable for debts of the Partnership, but not for acts of negligence committed by the other partners.
- LP (Limited Partnership):
- A legal entity which is a form of Partnership. An LP consists of one or more "general partners" who manage the company and are held liable for company debts and expenses, as well as one or more "limited partners" who are passive investors and not held liable for company debts and expenses.
- A word, phrase, or symbol that identifies the source of the goods/services of one company as differing from those of other companies. Marks must be filed to be protected by statute.
- MERP (Medical, Dental and Drug Expense Reimbursement Plan):
- A plan which allows a Corporation or Taxable LLC to deduct the cost of medical, dental, prescriptions and non prescription drug expenses not covered by health insurance. This allowable deduction is limited without the employee having to include the benefit in his or her income. Otherwise, the employee would have to pay for these benefits with after-tax dollars and could only deduct them personally if they exceeded 7.5% of adjusted gross income of the employee.
- Minimum Capital Contribution:
- This is the minimum amount that the stock may be sold for and the minimum amount of capital that must be in a company before it can issue dividends to its owners. Delaware, Florida and Nevada have no minimum capital requirements.
- The written record of affairs, typically kept in the corporate minute book, that details all of the resolutions adopted by owners and Directors as well as other actions taken by the company.
- Non-Profit Corporation:
- A non-stock Corporation conducted by a Board of Directors for a charitable purpose.
- Office Action:
- A document from the U.S. Patent & Trademark Office which objects, rejects or allows (with conditions) the subject matter of the trademark.
- Operating Agreement:
- A "partnership agreement" signed by the Members of an LLC that establishes the rules and regulations of an LLC's operations. It is similar to the bylaws of a Corporation, but also includes provisions found in Shareholder Agreements of Corporations.
- A person who is a member of a Partnership.
- A legal entity in which two or more persons agree to conduct business together. Each partner is personally liable for the acts of the partnership.
- Pass Through Tax Entity:
A Sole Proprietorship, Partnership, LLC (that has not made an election on Form 8832 to be taxed as a Corporation),
or an S-Corporation in which corporate profits pass-through on the form K-1 to the owners on their personal income returns without a separate corporate tax. The entity avoids the double taxation of a C-Corporation in which the entity pays income tax on its profits and the owners also pay taxes on the dividends.
- Passive Income:
- Income from the activities of businesses that the taxpayer does not physically participate in (passive investment assets), as well as income from all rental activities. Too much passive income may disqualify a Corporation from filing a Subchapter S Election.
- Personal Service Corporation Tax Status:
- The tax status of a C-Corporation or Taxable LLC which provides consulting or personal services. A company with this tax status must pay the top Corporation tax rate on its taxable income. (The graduated corporate tax rate starting at 15% can be used if at least 6% of the stock in the Corporation or units in the taxable-LLC are given to a person not employed by the Corporation or Taxable-LLC.
- Preemptive Rights:
- The right, but not obligation, of shareholders to have the first opportunity to buy new issues of stock or pre-empt the sale of stock to a third party. This allows owners to increase ownership and keep unwanted individuals from becoming stockholders.
- Promissory Note:
- A binding document that details an "I Owe You" between a creditor and a debtor. Examples of items listed on a promissory note include, but are not limited to: terms and conditions of the loan, when the loan will be repaid and how the loan will be repaid.
- Punitive Damages:
- (Sometimes referred to as "exemplary damages") - An amount of money that is awarded to a victim, with the intention of not just compensating the victim but also punishing the wrongdoer.
- Registered Agent:
- (Sometimes referred to as a "Resident Agent", depending on the state) - The person or entity designated to receive a company's Service of Process (Summons and Complaint in a lawsuit) on behalf of the company represented. This agent must be located, and available, at the provided address in that state. A Registered Agent is required for a company to remain in existence.
- Renewal and Revival:
- This terms describes when a company regains Current Status after paying back all penalties and fees, paying a reinstatement fee, and re-filing its articles.
- Resident Agent:
- (Sometimes referred to as a "Registered Agent", depending on the state) - The person designated to receive a company's Service of Process (Summons and Complaint in a lawsuit) on behalf of the company represented. This agent must be located, and available, at the provided address in that state. A Resident Agent is required for a company to remain in existence.
- Retained Earnings:
- Previously taxed earnings that a company retains for working capital.
- Revised Article 9:
- The new Uniform Commercial Code (UCC) passed by most states, effective July 31, 2001, which updated the law governing secured instruments. It provides in part that the place of filing UCC Financing Statements shall be with the state of incorporation, frequently Delaware.
- Rights of First Refusal:
- The preemptive right which is given by an owner to a lessee and enables the lendee to have the first opportunity to buy the property (should the owner decide to sell it). The owner must give a legitimate offer, which the lessee can either accept or refuse.
- Rollover IRA Account:
- (Sometimes referred to as a "conduit IRA") - A qualified retirement account that "rolls over" its assets to another qualified retirement account.
- A Corporation of no more than 100 stockholders (all of whom are US citizens or green card holders) that, upon election, is not required by law to pay income tax and thus passes its taxable income or losses through to its shareholders as reported on a Form K-1 each year.
- S Election:
- The election by members of a company with one or more U.S. citizens or permanent residents that results in the passing-through of a Corporation's taxable income or losses to the stockholders. The advantage of the S Election for Corporations is that profits distributed as S-Corporation dividends are treated as passive income not subject to employment taxes if reasonable compensation has been paid to stockholders performing services for the S-Corporation.
- Section 179:
- Allows for the deduction of 100% of the cost of assets as deferred in and up to the dollar limit defined (as of publication: $105,000) in the Internal Revenue Code.
- Section 351:
- Section of the Internal Revenue Code that permits the contribution of assets and/or the assignment of all the accounts receivable and accounts payable of a business to a newly formed Corporation or LLC without any tax consequences to the contributor.
- Series LLC:
- A unique LLC with unlimited asset segregation potential. Under one LLC, you can set up numerous "series" owning separate assets. According to the statute, 6 Del. C. Section 18-215, "the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the company generally or any other series thereof", as long as separate books and records are kept for each "series".
- Service of Process:
- Notifying a person that he or she has been accused of some legal offense. This process includes a summons, warrant, citation, or subpoena.
- Shareholder Agreement:
- This is an agreement signed by stockholders to place restrictions on the transfer of shares. The purpose of this agreement is to retain rights and control of the company with the original stockholders so as to discourage unwanted third parties from obtaining voting-shares and to stipulate the terms and conditions for the valuation and purchase of shares among the stockholders.
- Sole Proprietor:
- The owner of an unincorporated, single-owner business or one-Member LLC, who is held fully liable for all business debts and expenses of the company. The income and expenses from this business are reported on Schedule "C" of the owner's Form 1040.
- Sole Proprietorship:
- An individually-owned business that is not incorporated or is a one-Member LLC. The owner ("sole proprietor") is held 100% personally liable for all business debts and expenses.
- Springing Member LLC:
- This is a one-Member LLC which contains a non-equity member whose primary function is to "spring into running" the LLC should the single member be unable to operate the entity. This is a special purpose entity used for certain transactions that are to be sold to become marketable securities. The primary purpose is to avoid a subsidiary from becoming part of a parent company's bankruptcy estate.
- Statutory Trust:
- Formerly known as "Business Trusts", statutory trusts are designed for financing purposes to hold a single significant asset, such as a cruise ship, aircraft or office tower.
- Subchapter S Election:
- (Also referred to as an S Election) - The election by stockholders of a company or LLC Members with one or more U.S. citizens or permanent residents that results in the passing-through of a Corporation's taxable income to the stockholders. Trusts, Corporations and non-U.S. citizens cannot be stockholders or LLC Members without disqualifying the S Election.
- Tax Elections:
- The elections by companies to be treated as a certain type of entity with regards to tax purposes. (eg. Form 2553 for S Elections or Form 8832 for C-elections).
- Tax Shelter:
- An investment that offers the advantage of legally avoiding or reducing tax liabilities.
- Taxable LLC:
- This is an LLC which has elected to be taxed like a C-Corporation which requires filing a Form 1120 U.S. Corporation Income Tax Return each year. This election takes place after filing an 8832 tax election with the IRS (within 75 days of formation or 75 days from the beginning of any calendar year after formation).
- A civil, but not criminal, wrong. It is an injury against a person or property, commonly in the form of negligence or intentional acts that harm another.
- Trade Name:
- The name used by a company which distinguishes its brand from other brands of the same product type.
- UCC (Uniform Commerical Code):
- Laws governing the sale of goods and security interests in moveable property and intangible property. These laws were compiled by the American Law Institute National Conference of Commissioners and are uniform among various jurisdictions.
- Umbrella Organization:
- An association of organizations that work together for some specified purpose. The "Umbrella Organization" provides resources, and sometimes an identity, to the smaller organizations that they are responsible for. This term also refers to the Master Company in a Series LLC.
- U.S. Partnership Return:
- This is the form 1065 return required for a multi-member LLC which has not elected another tax status. It is an informational return in which the Partnership reports income but does not pay tax. The owners pay tax according to the K-1 they receive, reflecting their share of the profits or losses.
- Working Capital:
- The amount of capital/current assets that is available for use in company operations. Working Capital is calculated by subtracting current liabilities from current assets.
- Workmen's Compensation Insurance:
- Insurance plans which compensate for the death or injury suffered by a worker while on the job.
The Williams Law Firm, P.A. acts as general counsel for Agents and Corporations, Inc. The firm has an "A" rating from the Martindale Hubbell Law Directory. To decide on the type of company you should form and to get help with the technical details, call 800-759-2248.
If you have any questions on which entity or state to choose, then please contact us for immediate assistance.
David Wiliams, Esq., John Williams, Esq., or any of our Incorporation Specialists
Agents and Corporations, Inc.
1201 Orange Street, Suite 600
Wilmington, Delaware 19801
When sending us an e-mail, please provide us with your name, address, telephone number and fax number so that we can promptly respond to your request. Thank you.