Someone asked me a question today...If a C Corporation has not issued any stock, but has had income and has acquired assets, who owns any assets of that corporation?
It is impossible for a C corporation to exist without issuing stock. When you register the corporation with the Secretary of State (or whatever the office is called in the appropriate state) there is a "initial incorporator". Until such time as additional shares are issued or he transfers the ownership to other persons he owns the corporation.
Thanks for the replies. We've been discussing asset protection and have been researching corporations, especially in Nevada, and comparing that to trust. Last night I found a reference that in Nevada, the ownership of the company can be decided by the Director(s) if the stock has not been issued, and there is no requirement to issue stock immediately. And that there have been very few cases where the ownershp of the corporation has been required to be disclossed by the State of Nevada, and that those involved cases of fraud. I'd like to know if anyone can verify whether this is accurate.
I'm not aware of any states that require them, but operating agreements are highly recommended for LLCs and By-laws for S-corps. Both set forth the rules and procedures for the company. The more owners there are, the more complex the document will be.
I could write for hours on the subject of Nevada corporations and LLCs. Be wary of them. The Nevada corp doesn't provide the secrecy its promoters claim. Imagine yourself at a debtor's examination in the judge's conference room. Then picture yourself telling the judge you can't say who owns the Nevada corporation. Or worse yet, imagine the judge finding out that you failed to disclose your ownership. If you can stomach that, then yes, I presume you have some creditor protection. But be prepared to spend some time in jail. In reality, Nevada corps make it a little bit more difficult for creditors to figure out what you own BEFORE they obtain a judgment. That might help you out.
Remember that Nevada courts will have to recognize judgments obtained in other states under the Full Faith and Credit clause of the US Constitution. In other words, you only get the Nevada benefits if the claim against you arose in Nevada.
In sum, if you choose a corporation, use one in your own state. They provide the same protection and don't carry the negative stigma a Nevada corp carries.
Also watch out for claims that a Nevada corp will save you income taxes. It won't. Yes, the entity itself doesn't have to pay tax, but your state will tax your income wherever it is earned. (assuming you're in a state with an income tax)
Is this a guessing game? I am going to take a stab.
The C-corp does as it is considered is own entity.
It is impossible for a C corporation to exist without issuing stock. When you register the corporation with the Secretary of State (or whatever the office is called in the appropriate state) there is a "initial incorporator". Until such time as additional shares are issued or he transfers the ownership to other persons he owns the corporation.
CommercialKing is right on the money.
[addsig]
Thanks Bill.
Whoever contributes assets to the corp is the owner. A corporation cannot create its own assets.
Thanks for the replies. We've been discussing asset protection and have been researching corporations, especially in Nevada, and comparing that to trust. Last night I found a reference that in Nevada, the ownership of the company can be decided by the Director(s) if the stock has not been issued, and there is no requirement to issue stock immediately. And that there have been very few cases where the ownershp of the corporation has been required to be disclossed by the State of Nevada, and that those involved cases of fraud. I'd like to know if anyone can verify whether this is accurate.
Terry
commercialking
Once you set up a s-corp, I know with LLC you have to setup an operating agreement to run your business.
Do you have to do the same with a s-corp?
Carol
Ohio
I'm not aware of any states that require them, but operating agreements are highly recommended for LLCs and By-laws for S-corps. Both set forth the rules and procedures for the company. The more owners there are, the more complex the document will be.
I could write for hours on the subject of Nevada corporations and LLCs. Be wary of them. The Nevada corp doesn't provide the secrecy its promoters claim. Imagine yourself at a debtor's examination in the judge's conference room. Then picture yourself telling the judge you can't say who owns the Nevada corporation. Or worse yet, imagine the judge finding out that you failed to disclose your ownership. If you can stomach that, then yes, I presume you have some creditor protection. But be prepared to spend some time in jail. In reality, Nevada corps make it a little bit more difficult for creditors to figure out what you own BEFORE they obtain a judgment. That might help you out.
Remember that Nevada courts will have to recognize judgments obtained in other states under the Full Faith and Credit clause of the US Constitution. In other words, you only get the Nevada benefits if the claim against you arose in Nevada.
In sum, if you choose a corporation, use one in your own state. They provide the same protection and don't carry the negative stigma a Nevada corp carries.
Also watch out for claims that a Nevada corp will save you income taxes. It won't. Yes, the entity itself doesn't have to pay tax, but your state will tax your income wherever it is earned. (assuming you're in a state with an income tax)