The purpose is simply to designate a person or business on the records of the secretary of state as the responsible party to receive information, legal papers, documents, etc., on behalf of the entity. The registered agent is most commonly the person who is forming the new entity. There are companies that act as registered agents and can be used for this purpose, but they charge annual fees ranging from $100 up to $300.

Larger companies who must register in many different states as a foreign corporation doing business in that state, often use one of the larger national registered agent companies for that purpose. A company, although more expensive, can be helpful if you are gone a lot or if you don’t have a physical address to receive legal service or mail.

Also, if a professional corporation (one offering a professional service such as law, medicine, accounting, etc.) is formed, then usually the owners/shareholders must all hold the same professional license and can only engage in that particular profession under the corporation’s charter.

Practical Suggestion: If you are just testing a business idea or concept, it may be okay to start as a sole proprietor or partnership for a short time until you know if the project is going to work. However, keep in mind that if you get sued during the time you operate as a sole proprietor, even though you may incorporate or form an LLC later, you will have no liability protection for events which occurred before you formed the entity.

For example, if you incorporate in Nevada but your business office is in Oregon and you do most of your business in Oregon, you will have to file and pay fees in Oregon as a foreign corporation doing business in Oregon, in addition to incorporating and paying fees in Nevada.

This dual filing can be expensive and can result in substantially more record keeping which may outweigh any potential advantages. Some larger corporations are registered as foreign corporations in every state, but this is expensive and time consuming for most smaller businesses.

Occasionally, there is a valid reason for incorporating in a state different than where you conduct business. There may be some special tax or liability advantages in a particular state that are beneficial to your special type of business.

If you operate a business that provides its product or services everywhere, such as an internet-based business, then you have more choices. However, if you do substantial business in any particular state, you may still be required to register in that state as a foreign corporation.

For more information on corporate filing offices visit:
http://nass.org
http://www.keytlaw.com

For these reasons, it is generally not beneficial or realistic for smaller companies to attempt to go public. In the past few years, the reporting requirements for public companies have grown and require more legal and accounting expertise and expense.

One example is that public companies are now required to have independent board members (meaning they cannot be shareholders or have significant benefits in the company) and an independent auditing committee that oversees the company’s financial matters.

Due to the potential liability of being on the board of directors or on the audit committee, few people are willing to serve unless they are paid a substantial sum of money and are provided with liability insurance from the company.

Liability insurance for directors of a public company is expensive. Because of the many requirements placed upon public companies, some companies, which were once public companies, have opted to become private companies. When a business has grown substantially and has sufficient revenues, it might consider going public.

The benefits include the ability to sell stock to the public to raise money and it provides an exit strategy to the original shareholders or owners by giving them a way to cash out of the company. It also provides shareholders with a more liquid investment because there is a public market where they can sell their shares.

Usually, the statutes provide that only a person holding the license required to practice the professional service can be a shareholder or at least a majority shareholder. In addition, only those holding the professional license can normally be a director or officer of the corporation except for the corporate secretary.

The reason for these restrictions is that the professionals are strictly regulated by license requirements of their profession and the law does not want unlicensed people making decisions that might compromise the professional’s judgment on matters within their expertise.

Practical Suggestion: If you are just testing a business idea or concept, it may be okay to start as a sole proprietor or partnership for a short time until you know if the project is going to work. However, keep in mind that if you get sued during the time you operate as a sole proprietor, even though you may incorporate or form an LLC later, you will have no liability protection for events that occurred before you formed the entity.

The most basic and simple form is the sole proprietorship, which involves business ownership by one person or in some cases by husband and wife. Other forms include a partnership, limited partnership, regular or C corporation, S corporation, Limited Liability Company (LLC) or Limited Liability Partnership (LLP).

Corporations have sometimes been called legal fictions, meaning they exist only because the state law authorizes their existence. Corporations were first authorized by state laws to provide a form of doing business where a person could invest money in a business venture without subjecting their personal assets or property to liability.

Corporations are considered legal entities, separate and apart from the shareholders or people who own them. Thus, if a corporation is sued and the court rules against the corporation, the law allows the judgment holder to satisfy the judgment (get paid) only from the assets or property of the corporation and not the private property of the individual shareholders.

This corporate attribute is called limited liability protection. In a sole proprietorship or partnership, a judgment can be satisfied from the personal property of the individual owners of the business if there are insufficient business assets to satisfy the judgment.

Not only do corporations owe their existence to state law, but they are also governed and regulated by the corporate laws of the state in which they are incorporated and/or in which they choose to do business.

Note: If a corporation sells stock, it may also be regulated by state and federal security laws.

The corporation laws for many states can now be found online. If you need to review the corporate law in your state, the following sources may help.

For more information on state laws visit:
http://www.findlaw.com/11stategov/or/laws.html