[ESTABLISHING A BUSINESS ENTITY IN THE UNITED STATES] 500
regulations designed to protect consumers. In nearly any scenario, these regulations may create extensive administrative costs, and the advice of competent legal counsel will be needed to ensure compliance with all related federal and state regulations. The Corporate Transparency Act, which went into effect in January 2024, requires that certain personal information concerning individuals with control over a newly formed entity be reported to the Financial Crimes Enforcement Network, a division of the U.S. Treasury, within 90 days of formation, and that such information be updated whenever there are changes. 2. Forming Your Business Entity – First Steps 2.1 Introduction Once the organizers have decided on a particular business entity, there are still many steps to take before opening for business. In most states, a business must apply for a business license and have a registered agent in the state and should consider reserving its name. Moreover, any business with employees or any other business required to file a tax return must obtain a Federal Employer Identification Number from the IRS and consult with the state’s tax regulator. In Delaware and many other states, the business entity is formed on the same day as filing so long as the filing meets all statutory requirements. Often the filing process and payment of fees may be completed online. This Section identifies the concrete first steps to forming a particular business entity. Rather than offering an exhaustive list, it highlights the key statutory requirements based on Delaware law. 2.2 The Corporation In order to form a corporation, a business must file its certificate of incorporation with the Secretary of State. The certificate must contain a variety of information, including the name, registered office address, and a general
corporate purpose. Moreover, the certificate must name the incorporator and may name the initial directors. The certificate may provide that the board of directors can amend the by- laws. Stockholder approval will be required for any amendment to the certificate of incorporation after receipt of any payment for stock. 2.3 The General Partnership A general partnership is formed anytime two or more persons agree to carry-on as owners of a business for profit, and no formal state filing is required, except that many states require the filing of a fictitious name registration for the name under which the partnership is doing business. The partnership is formed whether or not these individuals intend to form the partnership. Nevertheless, a partnership may file a statement of partnership existence with the Secretary of State. Generally speaking, however, the partnership will be governed by the terms of its partnership agreement unless it directly contradicts a mandatory statutory rule. 2.4 The Limited Liability Company (“LLC”) An LLC must file a certificate of formation with the Secretary of State. The certificate must include the name of the LLC and the name and address of the registered agent and the registered office. Members of the LLC must draft an LLC agreement that can become effective after or at the date of filing. There is no requirement to file the LLC agreement. 2.5 The Limited Partnership (“LP”) All general partners must file a certificate of limited partnership with the Secretary of State in order to form an LP. The certificate includes the following information: name of the partnership, name and address of the registered agent and office, and names and addresses of all general partners. Again, the partners should pay careful attention to the
ILN Corporate Group – Establishing a Business Entity Series
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