Incorporating a family network and relationships can provide a number of protections, both legally and on a tax basis. However, to go down this path an involved family still needs to function as a business and not just a collection of relatives. This means that the family actually has to be functioning as some sort of business. The steps to incorporation under such circumstances are the same as an ordinary business.
Identify all the members to be owners in the family corporation. Choose family members who will take an active role in the corporation and are legally old enough to be adults. Define the family's corporate name and brand. Make sure the name of the corporation includes a distinctive piece, a descriptive component and a legal ending (for example "Lions Production, Inc.").
Draft and prepare the family corporation by-laws to dictate how each of the partners and owners of the corporation shall behave, particularly with shareholders.
Prepare the family's articles of incorporation or business charter, making sure to include the function of the business, its headquarters of operation and the number of shares of ownership in the corporation.
Apply for and secure a tax identification number from the Internal Revenue Service and a business license from the local government jurisdiction the corporation will function in (sometimes business licenses are at the city level and sometimes at the county level).
Choose a state to file the family corporation in after researching the benefits and drawbacks of each state's business laws. Make sure to research the tax implications of the chosen state before making a final decision for filing. File the business charter with the respective local state government agency that handles incorporating (the specific department varies from state to state). Pay the necessary filing fees to the government agency in charge (it can range from $25 to $1,000).
Maintain a calendar of regular meetings with a minimum of at least one annual corporation meeting to meet the conditions of the by-laws.
Items you will need
- An attorney
- Research on various state corporation laws
- Funding to pay for filing fees
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