Archive for February, 2011

How Do I Form My Massachusetts Corporation? The 7 Steps to Forming Your Corporation in Massachusetts

Maybe you’re operating your business as a sole proprietor (a “dba”) and you’re ready to take your business “to the next level” and form a corporation. Maybe you’re starting a new business and want the protection that a corporation will provide.

Well, here are the 7 steps to take when forming your Massachusetts corporation.

  • Step 1 – Choose a Corporate Name. But, before you can do anything with that new corporate name, you need to check it’s availability with the Secretary of State. If it’s available, then you can reserve it until you’re ready to file you Articles of Organization. But, if the name is too close to an existing corporation the Secretary of State won’t accept your filing without the consent of the current holder of the name.
  • Step 2 – Decide on the Corporate Structure. Who will the officers (i.e., the President, Treasurer, Clerk) of the corporation be? Who will the Board of Directors be? Massachusetts allows one person to serve in all of these capacities, but you need to decide on this before filing your Articles of Organization.What about shares of stock? Will you be issuing just shares of common stock? Or, will you also be issuing preferred shares because you may have interested investors? These are all questions that you must answer when deciding on this corporate structure.
  • Step 3 – Prepare and File the Articles of Organization with the Secretary of State. Articles of Organization inform the state, and the rest of the world, about the corporation’s basic information (i.e., its name, business address, officers) and its business purpose. Articles of Organization in Massachusetts can now be filed online with the appropriate filing fee. Until the Articles are accepted by the Secretary of State, though, the corporation will not be an “official” corporation.
  • Step 4 – Create Your Corporate Bylaws. Bylaws are the “playbook” of how a corporation is to be run and operated. It outlines the rights, powers and responsibilities of shareholders, directors and officers. It establishes when and where annual meetings are to take place, the procedures for calling “special meetings,” and how to fill corporate vacancies. The bylaws aren’t filed with the Secretary of State, but are instead included with the corporate records.
  • Step 5 – Obtain Your Corporation’s Federal Identification Number. Once created and accepted, your corporation now has its own “legal identity” and requires a federal identification number (commonly known as a “fed i.d. number” or an “04 number”). Your bank will require your company’s “04 number” before it will allow you to open a business checking account. In most circumstances, the IRS now permits you to fill out an online form and issues the number in a matter of minutes.
  • Step 6 – Hold the First Meetings of the Shareholders and Board of Directors. During these meetings the shareholders will officially elect the Board of Directors and the Board will then ratify the acts taken before the filing of the Articles of Organization. A lot of other things usually occur during the first meetings including the election of officers, the acceptance of the bylaws and the issuance of stock certificates.  The minutes of these meetings should be taken and kept with the corporate records.
  • Step 7 – Prepare and File a Declaration of S-Corporation Status. If you decide that you would like your corporation treated as an S-Corporation by the IRS (and this decision should usually be made in consultation with an accountant and/or attorney), then an IRS form must be filled out, signed and filed with the IRS. The IRS will then send you its decision on whether it accepts your election as an S-Corp within 30-60 days. It is critical to remember, though, that the form must be filed within a certain time frame after forming your corporation.

Once you’ve taken your 7 steps, your Massachusetts corporation should be up and ready to run.  All that’s left is to do what you do best – running your business and making money.

Attorney Andrew Garcia, Your SouthCoast Business Attorney

Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. He’s created a Business Legal Planning system that will walk you through the process of forming your Massachusetts corporation. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at agarcia@phillipsgarcia.com or by calling (508) 998-0800.

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Bank of America, Citigroup & Wells Fargo Warn of Costs from Probes

 

Bank of America warns of fines and legal costs from investigations into its faulty foreclosure processes.

Bank of America, Wells Fargo & Co. and Citigroup, Inc. are warning that a comprehensive investigation by the 50 states attorneys general into their faulty foreclosure practices, which include admissions of “robosigning” thousands of affidavits and court filings, run the risk of major fines and other legal related costs.

According to a report in the Washington Post, the three big banks “called out” the possible financial repercussions in annual filings with the SEC. The filings, though, failed to provide any specific details about how much was at risk.

“Those investigations and any irregularities that might be found in our foreclosure precesses, along with any remedial steps taken in response to governmental investigations or to our own internal assessment, could have a material adverse effect on our financial condition and results of operations,” Bank of America said. BoA warned that the attorneys general probe could result in material fines and penalties, and could expose the bank to new lawsuits and more legal costs.

Citigroup, parent company to CitiMortgage said that the investigations and scrutiny over its foreclosure activities have “resulted in, and may continue to result in, the diversion of management’s attention and increased expense, and could result in fines, penalties, other equitable remedies, such as principal reduction programs and significant legal, negative reputational and other other costs.”

Wells Fargo cited to increased scrutiny by governmental agencies and warned that it was likely that more probes against Wells Fargo would be initiated which might include civil monetary penalties.

 

 

Attorney Andrew Garcia, Your SouthCoast Business Attorney

Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at agarcia@phillipsgarcia.com or by calling (508) 998-0800.

 

 

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Citigroup & Deutsche Bank Sued Over Faulty Mortgages

 

Citigroup alleged to have misled investor and hidden risks of mortgage-backed securities

Allstate Corp. sued Citigroup, the parent company of CitiBank and CitiMortgage, and Deutsche Bank AG claiming that the banks hid the risks on more than $385 million of mortgage backed securities that it bought.

 

According to a report by Reuters, Allstate is among a growing number of companies that are suing banks that the insurance giant believes misled it about the safety of mortgage debt that went bad during the housing and foreclosure crises. Allstate has also sued Bank of America Corp. and JP Morgan Chase & Co., in similar lawsuits to recover losses on more than $1.8 billion of securities.

In the lawsuit filed on Friday in the New York state court, Allstate alleges that it bought more than $200 million of mortgage-backed securities from Citigroup and more than $185 million from Deutsche Bank. Allstate claims that it had been led to believe that it was buying highly rated, safe securities, most of which carried triple-A ratings backed by high-quality loans. Allstate alleges, though, that both Citi and Deutsche Bank knew that the loan pools were “toxic” and filled with loans to borrowers who were likely to, and often did, default on their mortgage loans. As a result, Allstate claims that it resulted in significant losses to the insurer.

In the lawsuits, Allstate is seeking to undo the securities purchases that took place between 2004 and 2007, or in the alternative to recover its lost principal and interest.

Lawsuits by investors like Allstate are just part of a growing trend of claims against banks that began securitizing risky mortgage loans. Citi already faces class action lawsuits against it by homeowners who are alleging that the bank misled and mismanaged their loan modification requests under the federal government’s HAMP program.

 

Attorney Andrew Garcia, Your SouthCoast Business Attorney

Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at agarcia@phillipsgarcia.com or by calling (508) 998-0800.

 

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Bank of America to Add $59 Fee to Some Credit Cards

Bank of America to begin charging subprime customers new $59 fee.

Bank of America announced last week that it would be assessing some existing credit card holders a new $59 fee.  According to an Associated Press report, BoA began mailing out notices to customers notifying them of the new assessment. A BoA spokeswoman, Betty Riess said that the fee would be charged in customers’ May statements.

About 5% of BoA’s credit card customers will be affected by the fee. The fee, though, isn’t tied to a specific type of BoA credit card product.  Instead it is based strictly on a consumer’s “risk profile.” According to BoA’s Riess, affected customers may be carrying balances close to their credit limit, may have “lower-than-average” FICO credit scores, or may make late payments more often than other customers.

On average, the affected customers carry a 14% interest rate on their credit accounts and, according to the AP report, wouldn’t generally be approved for a no-fee account with BoA under current credit-market conditions.

Under new federal credit regulations that went into effect last year, credit card issuers must give customers 45 days notice before changing the terms of the credit card account. Card issuers are also prohibited from raising interest rates in the first year and late fees are capped at $25 per violation.

BoA’s new $59 fee seems to be aimed at “less than prime” card holders. According to a report released by CardHub.com, banks may be singling out subprime customers with harsher terms and higher fees because the new regulations have made that group less profitable for card issuers.

Attorney Andrew Garcia, Your SouthCoast Business Attorney

Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at agarcia@phillipsgarcia.com or by calling (508) 998-0800.

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How Do I File Massachusetts Annual Reports Online?

If you own a Massachusetts corporation, you have to file your annual report with the Secretary of State. Your corporation’s annual report can be filed online at the Secretary of State’s website. But, many business owners aren’t sure how to do it so they end up spending money paying an accountant or a lawyer to do it for them. This video will walk you through the process to file your annual report online and will SAVE YOUR BUSINESS MONEY by avoiding needless legal or accounting fees.

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