Business Owner S Checklist for Corporation Formation

BUSINESS OWNER’S CHECKLIST FOR CORPORATION FORMATION

DONE

Part I: Completing the Corporate Entity

Contact your Certified Public Accountant (CPA): It is very important that you work with your business attorney and your CPA for a smooth transition with your new corporation. Contact your CPA and make sure that he/she has all of the documentation and information that he/she may need to properly file your tax returns. ______

Contact your Personal financial Advisor: Contact your personal financial advisor, if different than the CPA, because the corporate entity may have an effect on how you structure your retirement planning in the future. ______

Create new Bank Accounts under the corporate entity. Include any fictitious business names (dba), if applicable. Notes to client: we did not apply for any dba names for your corporation.

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Obtain an Employment Development Department (EDD) account number: You may contact the EDD directly, your payroll company, or your CPA to assist you in obtaining this account number. The EDD’s information is listed below.

Employment Development Department
800 Capitol Mall, MIC 83
Sacramento, CA 95814

1-888-745-3886

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Create new Payroll Accounts under the corporate entity. Contact your payroll company for their assistance in transferring the accounts to the new corporation. Also work with your CPA firm to make sure the payroll timing corresponds with the timing of the CPA’s tax filing.

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Obtain a Business License with the city in which your business is Headquartered. Review the City website, usually you can download a form from a city’s website or you can contact the Business License Division to obtain that form. Make a photocopy of the application for your corporate records, then submit the license application with the requested fee. Then note how often the license must be renewed and calendar the deadline. You may also contact our firm to notify us of the deadline. Please mail us a copy of the business license after you have obtained it. ______

Transfer your Business Insurance to the Corporation. Contact your business insurance representatives to discuss transferring the insurance to the corporation. The different types of insurance include Workers compensation, general liability, business property, business auto insurance, Errors & Omissions (E&O), Directors & Officers Insurance (D&O), and products liability insurance. ______

Transfer your assets into the Corporation. Generally the assets will be transferred into the corporation based upon the Assignment of Assets and Liabilities form that was created by the firm and signed by the shareholder. However, sometimes there are certain assets which the title must be specifically transferred, such as an automobile, where the title must be transferred to the corporation.

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Transfer your liabilities into the Corporation. Generally the liabilities will be transferred into the corporation based upon the Assignment of Assets and Liabilities form. However, business liabilities usually include debt, such as a fixed loan, line of credit, credit card, or a personal loan to the company. In order to transfer your liabilities to the corporation, you need to contact your banker and discuss the process. Be aware, that for whatever reason, the corporation may not be approved for the same amount of debt that the sole proprietor had. So it is a good idea to keep your existing debt until you are certain that the corporation will be approved for at least the same amount. You will probably still have to personally guarantee your corporate liabilities, so don’t be too hard on the banker when he/she brings this up. This is standard in the banking industry.

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Notify your Landlord of the new entity. First contact your landlord to explain that you have recently formed a corporation for your existing business. Many landlords will want to receive the articles of incorporation to verify that it is an official corporation. You may choose to review your lease carefully to see what is the process of assigning the lease to a new tenant. Under some lease agreements, it is considered an assignment when the business is transferred into a corporation, but many times it is not considered an assignment unless there is a certain percentage of change in the ownership of the business.

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Notify your Equipment Leasing Company. If you have any equipment that you lease, then you should notify your equipment leasing company. Contact them and ask them what you need to do in order to effect the change.

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Any other Contract. Carefully consider if there was any other contract that your business entered into before you set up the corporation. If the contract is still in effect, then contact the other party and try to get the contract modified with the new name or assigned to the corporation. ______
Business Cards, Stationary, Letterhead, Advertisements. Change the name on all of your business promotional material, including business cards, stationary, letterhead, and all advertisements. The new name should be the corporate name, unless a fictitious business name has been filed on behalf of the corporation.

BUSINESS OWNER’S CHECKLIST FOR RISK MANAGEMENT

PART II. Risk Management and your Business

1. Customer Contracts

2. Managed Service Provider – vendor agreements

3. Non-Disclosure Agreements

4. Buy/Sell Agreement

1. Fictitious Business Name Filings

2. Business License Filing

3. State Board of Equalization

4. Agencies specific to your industry

Ex: professional licenses or department of health