Important Note: If your corporation is administratively suspended or dissolved, the liability protection of your corporation may also be suspended or lacking, and your personal assets may be at risk for any legal actions, or causes of action, which might arise during that period of time. It is important not to let this happen when it is relatively easy to get your annual report form filed.

Most states require the payment of an annual fee ranging from $20 to $100 when filing the report. In some states there is no fee required.

If you do not file the annual report form timely, then your corporation can be suspended as an active corporation until you do file the form. Most states grant you a grace period, but if the form is not filed within the grace period, then your corporation is administratively dissolved which means it cannot legally conduct business within the state.

Special Note: You need to be aware that during the time your corporation is administratively suspended or dissolved, the liability protection of your corporation may also be suspended or lacking and your personal assets may be at risk for any legal actions, or causes of action, which might arise during that period of time.

Stock certificates represent the number of shares owned by an individual. Issuing stock certificates is traditional in corporations but a person can own shares of stock without a certificate. The corporation’s directors are empowered to authorize the issuance of shares. This is typically done in a corporate resolution stating that a certain number of shares will be issued to a certain individual.

The state is not involved in issuing stock certificates. That is up to the corporation. The corporation could print up its own certificates or obtain blank stock certificates, which are available from most stationery or business supply stores. The number of shares and names of shareholders can be inserted with a typewriter or computer. Pre-printed certificates can also be purchased and are usually part of a corporate kit.

To obtain blank stock certificates visit:
Corporate Stock Certificates

A “corporate seal” is a seal much like a notary seal but with the corporate name imprinted on it. In past years, corporate seals were used more frequently to authenticate corporate documents. In my experience, corporate seals are seldom used today. Occasionally, a bank or some other institution will ask for your corporate seal on a document.

You can usually obtain one at a rubber stamp store or similar business within a few days. My advice is to wait and see if you will really need it. If so, you can get one quickly in most cases. If you decide you need or want one, the link provides a list of companies that sell them. Corporate seals often come as part of a corporate kit. Independently, they sell for approximately $30 to $100 depending on how fancy they are.

A “corporate kit” generally consists of a notebook for keeping corporate minutes and records, a supply of blank stock certificates, and a corporate seal. Many office supply stores and rubber stamp companies sell corporate kits as a convenient way to keep corporate records in proper order. However, a corporate kit is not required and many people get along fine without them by using a basic file for corporate records and a few blank stock certificates if needed.

Corporate seals, which are similar to notary stamps but with the corporate name on them, are not required either and it is my experience that they are seldom used now days. Corporate kits may be handy or may be attractive but if you are trying to save money, you can easily get by without them. If you decide you need or want one, the link will provide a list of companies that sell them. Most corporate kits will cost in the range of $50 to $150.

The downside of forming more entities to conduct business is that
each entity must keep its own set of records and file its own tax
returns. This, in turn, increases the amount of record keeping and
probably increases your accounting and tax filing costs.

A typical state law will read something like this: “A foreign
corporation may not transact business in this state until it obtains a
certificate of authority from the secretary of state.” The concept of
“transacting business’ involves regular, repeated, and continuing
business contacts within the state. In a further attempt to clarify
what “transacting business” really means, many state laws suggest
that the following types of conduct do not qualify as transacting
business:

• Maintaining, settling, or defending legal proceedings
• Holding meetings of the board of directors or shareholders
• Selling through independent contractors
• Creating or acquiring indebtedness, mortgages, or security
  interests
• Securing, enforcing, or collecting debts
• Conducting isolated transactions completed within a 30 day
  period

If you are doing substantial business in another state of a nature you
think might qualify as “transacting business” then you should check
with the Corporate Filing Office to obtain an application for
authority. The process usually involves, filing the application with the
Corporate Filing Office, appointing a registered agent and paying
the filing fee. Failure to file as a foreign corporation in the different states can subject your
corporation to penalties.

The purpose is to prevent the dilution of your ownership percentage
and the right of control when new shares are issued.
For example, if you own 1000 of 2000 issued shares of a company
then you own 50% of the issued shares. If the directors decide to
issue another 1000 shares to someone else, then you will own 1000
shares of 3000 issued shares or 33% of the total issued shares.

Basically, your ownership percentage has been reduced or diluted
from 50% to 33.33%. If you were entitled to preemptive rights, you
would have the option (but not the requirement) to purchase
enough additional shares to try to maintain your 50% ownership.

Under most state incorporation laws, preemptive rights are not
automatic. In order to have them, they must be agreed to by the
incorporators and must be included in the articles of incorporation.