Are you motivated enough to start a new eCommerce or another type of business? Then you should start with forming your business entity, because this way your business is legally accepted within the business world. If you have read our blogs dedicated to business entity formation, then you should already know their types and their benefits. But for those who don’t know about all the privileges of certain entities, we will at first list all the possible options. In general, the business world includes sole proprietorship, partnerships (general and limited), LLCs and Corporations (S-Corp, C-Corp).
What Are Bylaws?
If you are already sure about your future business entity, and it is a corporation, then let us get to the meat of this topic, and talk about documents that are vital for the existence of your corporation. The bylaws are fundamental documents which include all the rules and standards, according to which the corporation is going to be governed. The board of directors of the corporation handle the creation of this essential text.
Another important fact: Articles of Incorporation, another indispensable document, should be filed with the Secretary of State; meanwhile bylaws are aimed to regulate the inner system of the corporation. This however, doesn’t mean that without a bylaw, a corporation will ever exist. These documents are almost as important as Articles of Incorporation, which means you should take care of them equally.
Today, at Prestige Auditors, you will see the 5 things that should be included in your bylaws. Which is, of course, not the exhaustive list of what you should overall have. We promise that the next part, together with the remaining factors, will be available soon on our website!
- Your bylaws should have SOP – Statement of Purpose:
This is the most scenic part of the corporate bylaws. This section must show the main motive for setting up your business, what vision it has, who the main segment is, what makes your corporation special, and so forth. This is chiefly essential for non-profit corporations, because this would show their compliance with 501(c)(3) or 501(c)(4) of the Internal Revenue Code.
- Board of Directors:
This part of the bylaws should clearly identify the number of directors, their responsibilities, ways of requesting, performing meetings, and so on. Moreover, bylaws should include not only their “beginning,” by stating the main rules of their (directors’) selection, but also their “end” – the duration of their terms of office.
Board of directors is indeed important, but so are the members of the corporation. For its members, the company states and clarifies their responsibilities, rights, skills and qualifications, together with the regulations connected with their meetings, and ending of the membership.
- Meetings of Shareholders:
This part of your bylaws should indicate the period of annual and special meetings, how they should be called and conducted. Of course, your bylaws will also need to state the quorum for voting, and other regulations. During the once-a-year meeting, the activity of your business is discussed, as well as a review of the records showing the financial performance of a company, adjusting, confirming or even declining the bylaws.
- Committee Regulations:
Committees which include board members, are created for particular reasons, and can function not only during normal business operations, but can be created for one certain issue; when the issue is solved, the second type of committees are terminated. There can be fundraising, audit, ethics committees, and so forth.
There are still some things that should be included in your corporate bylaws, and we are going to help you with that. Remember, bylaws are as important as Articles of Incorporation, which makes them valuable and precious. Just be careful, and contact a lawyer before creating your own corporate bylaws. If you have any questions, or are willing to start a new eCommerce business, Prestige Auditors is there for you!