Glossary of Terms Startup?

Glossary of Terms

  • AMENDMENT (Corporate Formality): Any change made to the Articles or Bylaws of a corporation by the directors or stockholders.
  • ARTICLES: The articles of incorporation outline how the corporation is structured under the laws of the state where it is organized.
  • BENEFICIARY: The person, or persons, for whom the trust was established. They will receive the asset, or the benefit of the asset, at a particular time established by the Grantor.
  • BYLAWS: The bylaws of a corporation explain the operation of the corporation and the function of its various parts.
  • CAPITAL STOCK: The number of shares of a corporation has available to individuals (perhaps entities) that indicate ownership. The number of shares authorized is established by the secretary of state of the state of incorporation.
  • COMMON STOCK: The stock of a corporation that is held by the shareholders and usually has voting rights.
  • CORPORATE SEAL: A tool used to emboss the name of the corporation on official documents and stock certificates.
  • CORPORATION: A legal entity, owned by stockholders, managed by directors and operated by the officers. When used to conduct business, the corporation puts a barrier (veil) between your business and your personal life.
  • DIRECTOR: A person(s) who is elected by the stockholders of a corporation to manage said corporation.
  • DIVIDEND: Corporate after-tax profits that are distributed to the shareholders of a corporation.
  • EIN: The tax identification number issued by the IRS to each business entity and is the number the corporation uses to open bank accounts and conduct business. It is the number that separates the corporation from an individual’s social security number.
  • GRANTOR: The person gifting an asset to a trust.
  • LAND TRUST: A revocable trust specifically designed to hold the title to real property.
  • LIMITED LIABILITY COMPANY (LLC): A legal entity established to conduct business or hold assets. It has some of the characteristics of a corporation and some of the characteristics of a partnership. Many of the glossary terms for corporations can be applied to LLCs.
  • LIVING TRUST: The primary estate planning tool designed to avoid probate, provide for the care of minor children and containing life-directive instructions.
  • MANAGERS: The person(s) or entity appointed by the members to conduct the business operations of the LLC. The owner can be the manager.
  • MEMBERS: The owners of a Limited Liability Company.
  • MEMBERSHIP CERTIFICATE: A document given to the members of an LLC that indicates the percentage of ownership for each member.
  • OPERATING AGREEMENT: The document that explains the operation of an LLC, which is agreed upon and signed by all of the members. It is similar to the bylaws of acorporation.
  • QUORUM: A majority of the stockholders, or directors, necessary to be able to hold a meeting.
  • REGISTERED AGENT: The designated person, or company, who acts as agent for the service of process, the physical place or person to go to when filing notice of a lawsuit against a corporation, which is a requirement in every state.
  • RESOLUTION (Corporate Formality): A written decision by the directors or shareholders of a corporation, to take a particular course of action.

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