Q: I’m starting a Web-based business and leaning toward incorporation rather than an LLC because I’d like to attract employees by issuing stock. I understand that corporations must have boards of directors that hold meetings and vote. At this stage my company is just myself. Can a one-person board of directors legally exist? How could it perform functions such as voting?
A: Planning your business structure is important, and making an uninformed decision can lead to unpleasant surprises down the line. So you’re starting off right by inquiring about the details. However, you’ve fallen prey to a common misconception that prevents many small business owners from incorporating—even though that may be their best option.
Owning a corporation is not as difficult as many people assume. Not only can sole-director boards of directors exist, but they are common to single-shareholder corporations and are legal in many states, including Maryland.
Michael Hanley, a certified public accountant with Merl & Hanley in Smithtown, N.Y., says that the typical “room full of suits” that most of us picture when we think about a large corporate board of directors is not necessary for a small corporation.
“As the 100% owner of the business, you can act as the corporation’s sole director. You must hold an annual shareholders meeting during which minutes must be kept, a task that proves fairly easy for you as the sole shareholder,” he explains.
Read more.
Photo by scataudo.
No comments yet.