OUR ANSWERS TO FAQ (Frequently Asked Questions)

1. What are the different types of Corporations?
Please see the section Types of Incorporations to learn about the different entities.

2. Is an attorney required to form Corporations?
No, an attorney is not required for formation of Corporations. Guarantee Capital's Incorporation Services can save you time, as well as a substantial amount of money. However, if you are unsure about what business form is right for you, it is advisable to consult an attorney. Professional advice is always a plus as you begin to grow and develop your new Corporation.

3. What is a registered agent?
A registered agent/ registered office provides an agent as well as a place of delivery for service of process, notices, documents, and communications. The resident agent and the registered office must reside within the state of incorporation.

4. How many directors do I need to form a Corporation?
Only one director is required in most states. You may, however, be entitled to more than one director. Some states use the number of shareholders to determine the minimum number of directors. If the Corporation has less than three shareholders, then the number of directors may equal the number of shareholders. States which allow this include: AR, CA, HI, LA, ME, MD, MA, MO, NY, OH, VT, UT.

5. What are the powers and duties of the Board of Directors?
All corporate power is vested with the Board of Directors. They are elected by shareholders for a specified term. The board members act at board meetings where they set goals for the corporation, authorize the issuance of stock, and choose officers to run the daily operations of the business.

6. Why are corporate formalities so important?
If corporate formalities are not followed, you can lose all of your liability protection. This allows creditors to seize your personal assets ("piercing the corporate veil"). Courts have the ability to pierce the veil when corporate owners fail to follow corporate formalities, use corporate funds as their own personal funds, intentionally under capitalize their corporation, or enter into agreements without intending to live up to their end of the agreement.

7. What are Shareholders?
Shareholders are the owners of the corporation. Each share of stock represents a financial interest in the company. Shareholders may receive stock for cash or services to the company. Shareholders are responsible for electing the Board of Directors. Unless the shareholders are part of the management team (directors or officers), they have no authority to control the operations of the company. If they are dissatisfied with the management, they may elect a new Board of Directors or simply sell their shares.

8. What is stock?
Stock certificates represent the amount of money a shareholder has decided to invest in the corporation. Owning stock entitles a shareholder to certain rights such as voting rights and dividends. At formation, a company decides how much stock will be issued, and how many different classes of shares it will have (common, preferred, etc.). This formation is contained in the articles of Incorporatoin.

Generally, common stock entitles the owner to vote for directors and receive dividends. However, owning common stock does not guarantee that dividends will be paid. The Board of Directors must look at the Corporation's financial situation and decide whether it can legally authorize dividends to be paid. If so, dividend amounts are split among all common share and distributed to the shareholders.

Most small corporations do not have preferred stock. Preferred stock usually entitles the owner to receive a certain amount of dividends each year, provided the corporation can legally authorize that payment. Preferred shareholders are paid before common shareholders.

9. What is Par Value?
Par Value is the minimum amount for which a share of stock may be sold. The Board of Directors sets the actual price of the company's shares at its own discretion. Corporations will often set the Par Value of its own shares at a low number, such as one cent. This however, does not mean that the shares are worth only one cent- it only means that they can never be sold for less than that amount.

10. What is a Private Shelf Corporation?
A Private Shelf Corporation is a business that was incorporated several years prior, and shows history. It has been purchased by Guarantee Capital and converted into a status that allows it to be purchased or merged by another company or individual.

The Private Shelf Corporation is guaranteed to be free of any liens, judgments, or liabilities. The origial date of incorporation remains intact throughout any sale, merger, or name change procedure. This gives instant history to any new or existing business.

11. What is an established Credit Shelf Corporation?
Depending on your selection of a shelf corporation, you will gain 5 to 10 years of credit history for your immediate use when applying for credit. Corporations that have been in existence for many years and have thousands of dollars worth of established credit are available.

12. How long does it take to Incorporate?
For a small additional handling charge, your incorporation can be completed in 48 hours. Your incorporation can be completed with standard turnaround in 3 to 5 business days at no additional cost.