Articles of incorporation, the foundation papers that establish your firm with the state as a distinct legal entity, may be used to form corporations.
How long can a company exist? The articles of incorporation, the foundation papers that establish your firm with the state as a distinct legal entity, may establish this. If no definite period is specified for the company, it will continue in perpetuity as long as it is in good standing.
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Corporation Characteristics
Corporations offer stock to investors, who subsequently possess a portion of the firm. Corporations are controlled by the laws of the states in which they are formed. The formation papers are essentially identical, however they may be referred to as a charter or certificate of incorporation rather than articles of incorporation. Because a company is a legal entity distinct from its owners, it survives after the owners die or leave the firm.
If the formation papers do not include a time limit for the corporation’s existence, it will continue to exist until articles of dissolution are filed with the state. In certain states, the permanent life of the company must be noted in the articles of formation.
Restrictive wording in the articles of incorporation might be included to create the company just for a certain purpose with a restricted time period. You may choose a date when the corporation’s operations will be completed. The company will cease to exist on that day and must be dissolved unless the charter is subsequently revised by a director/shareholder vote.
Many states require companies to file yearly reports and pay filing costs. Noncompliance with these standards may result in the cancellation of the company registration. This is the situation, for example, in Maryland. Although you may make your company inactive by halting commercial operations or failing to file needed documents, you may still be liable for yearly fees if you do not follow correct dissolution processes. Furthermore, your company must continue to submit federal and state income taxes until it is formally dissolved. Depending on the state, you may be compelled to pay minimal taxes even if you are not doing business, as well as in certain situations, costs for inactivity.
The corporate structure restricts each owner’s personal responsibility to the amount of money he or she has invested in the firm. The company is treated as a distinct legal entity from its owner or owners.
Creating a Corporation
In addition to filing articles of incorporation with the secretary of state, depending on state legislation, you may be required to issue stock certificates and/or establish a board of directors.
Obtain all necessary state and municipal business licences and permits.
Apply for a tax identification number with the IRS (EIN).
Dissolution of a Corporation
You may dissolve your company in most states by filing articles of dissolution. Some states require you to put an ad in a certain magazine notifying the dissolution. In addition, you must settle any corporation fees, taxes, and liens. The remaining assets might then be dispersed among the shareholders. Because the procedure of dissolving your firm might be difficult, you should contact an attorney.
Related Case and Common Law
The Corporation Code, enacted in 1980, enables companies to operate for 50 years from the date of establishment. By changing the articles of incorporation, this may be extended by 50 years at a time. Within five years after the initial expiry date, this may be done.
You cannot not only prolong the company’s expiry date before that five-year period, but you also cannot do it after the expiration date has gone. A 2016 SEC decision barred a corporation created in 1962 from extending its lifetime, notwithstanding the company’s argument that the term should begin not with incorporation but with the enactment of the Corporation Code. The SEC argued that the 50-year term limitations existed prior to the code’s implementation in May 1980. However, educational corporations (as opposed to stock corporations) begin the 50-year tenure on May 1, 1980, if they were founded before that date.