Accountant Case

PROCESS OF INCORPORATION

Incorporation sounds like a fine idea. You prepare to incorporate Precision Tools.

(1) What are the steps in incorporating?

File documents of Articles of incorpiration.

(2) What is the purpose of filing articles?

Articles states how the company will function. Lowers your risk of liability.

(3) What are bylaws?

Set out rules on how the company will function. How they will elect BOD, how they will vote on issues. What power do officers have.

(4) Where do you incorporate?

Organizations will file in state they want to incorporate in by filing Articles with the secretary of state or state corp. Commission depending on the state.

(5) You draft the following document. What is missing?

The county where the filing agent is from.

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(6) The parties who are planning to be directors of Precision Tools Inc. worry about their personal liability. Can they eliminate or limit their liability? How?

Limit liability by stating in the articles.

(7) Precision Tools, Inc. is not doing well selling its tools. Plastics are the future. So the Precision Tools board changes the company's business to the manufacture of tooled plastic statues - customers can have a plastic bust made of themselves, at a fraction of the cost