Business Glossary & Terms to Know for Your New Business

ARTICLES: Also known as the “Certificate of Incorporation” or “Articles of Organization” established by the formation of the new business that is recognized by the state.

AMENDMENT: An addition or change made to the articles of incorporation

BOARD OF DIRECTORS: Appointed members that collectively supervise the inner workings of a business. A minimum of 3 directors are required for a New York State Not-For-Profit

BYLAWS:  Regulations and routine conduct contract among members to assist the business regulate its corporate functions. Located in the corporate kit.

CERTIFICATE OF AUTHORITY: Allows a foreign business to operate and collect sales tax in a new state.

CORPORATE KIT: A corporate kit is a record book that stores important business documents. Corp kits will include minutes & by-laws, stock certificates, and a stock transfer ledger. LLC kits will include an operating agreement, membership certificates and a membership listing.

CORPORATION: A legal entity separate from the people who own it, formed with the intention of making a profit or fulfilling a corporate goal.

DBA: “Doing Business As”, “Fictitious name” or an “Assumed name” allows a business to transact under a different name that stems from the businesses’ originally filed name.

DISSOLUTION: Legally ends the operation of the business when filed with the secretary of state.

DOMESTIC/ FOREIGN CORPORATION:   All businesses are domestic to the state they originally file in. When a business decides to do business in another state, it becomes a foreign corporation to the new jurisdiction.

FEDERAL TAX ID #: The (FEIN) number often called EIN number (employer identification number) is the social security # of the business. It is required for bank account formation as well as tax filings.

GOOD STANDING:  A business is considered in good standing when it is up to date with annual reports and fees due to the state.

INCORPORATOR:  An incorporator is the person responsible for arranging the formation of the articles.

LIMITED LIABILITY COMPANY (LLC): A business structure that allows for pass through taxation. A LLC has more flexibility than a corporation in that it has the ability to decide how it wants to be taxed.

LIMITED LIABILITY PARTNERSHIP (LLP): A partnership that requires 2 or more owners with limited personal liability.

LIMITED PARTNERSHIP (LP): A limited partnership includes a GP (general partner) and at least one limited partner.

MANAGERS:  A manager is chosen by the members of an LLC to administer tasks and duties to run the LLC effectively.

MEMBERS: A member of an LLC is an owner. If there is only one member, the LLC will be taxed like a sole proprietorship, unless the member choses to be taxed like a corporation. If there are multiple members, the LLC will be taxed like a partnership.

MEMBERSHIP CERTIFICATES:  In an LLC, membership certificates can be issued and are similar to stock in a corporation. They show individuals’ ownership and investment in the LLC.

MINUTES:  The formalities and procedures documented during the business meetings. Minutes and by-laws are included in a corporate kit.

NO PAR VALUE: No par value refers to a stock having no value

NOT-FOR-PROFIT: Non-profits are formed for the interest of the greater good without the intentions of making a profit. Non-profits can include, but are not limited to, clubs, charities, libraries and environmental programs.

ORGANIZER:  An organizer is the person responsible for forming an LLC.

PAR VALUE: Refers to the face value of a stock

PASS THROUGH TAXATION: The method in which business owners report profits on their individual tax returns rather than reporting them through the business entity itself.

PROCESS ADDRESS: The process address is the address where all federal mail pertaining to the business will be delivered.

PROFESSIONAL CORPORATION (PC): Dentists, doctors, lawyers, accountants and other professionals may choose to form a business under a professional corporation to protect their personal assets. Paid salary reported on W-2

PROFESSIONAL LIMITED LIABILITY COMPANY (PLLC): Professionals that form a PLLC will be taxed as sole proprietor with expenses and income reported on personal tax returns.

REGISTERED AGENT:  A person allocated to receive mail on behalf of the business.

SHAREHOLDERS: One or more persons or group of people that own at least one share of stock in a company. They are considered the owners of the company.

SOLE PROPRIETORSHIP: A sole proprietorship is done at the county level. It is an unincorporated business that does not differentiate between the business and the owner. The owner is responsible for all business debts and losses. In the event of getting sued, a sole proprietorship does not protect you from losing your personal assets.

STOCK CERTIFICATE: A stock certificate is a legal document that shows ownership of a company.

STOCK LEDGER: Records the ownership and transfer ship of stock. Found in a corporate kit.

TAX EXEMPT ORGANIZATION: When an organization meets certain requirements, it can apply for tax-exempt status to the IRS that will allow them to be excluded from paying federal income taxes on revenue relating to the organizations mission.


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Standard General Purpose

This Corporation is formed to engage in any lawful act or activity for which a corporation may be organized under the Business Corporation Law, provided That it is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained.

Who Is The Incorporator?

The incorporator is the person who creates the corporate existence by signing the articles of incorporation. The incorporator may be one of the shareholders, directors, or officers of the corporation, or any other person. Being listed as the incorporator is in no way demonstrating ownership in the corporation. The incorporator cannot be amended (changed) at a later date.

Effective Date of Incorporation

A corporation generally comes into existence and becomes officially “incorporated” when the Articles of Incorporation are filed with New York State. Becoming incorporated on the date of filing is usually the best option. However, if there is a reason that you require your corporation to have a later effective date, New York State allows up to a 90 day window. This future effective date is listed in the articles of incorporation when filed. If desired, indicate the date after filing that you want your corporation to begin.

One common example of a delayed filing date may occur in December. A person may want to have the corporation filed and ready to go for January. By not setting a start date for January 1st or later this may trigger Federal and State tax returns to be filed for the prior year even though no actual business has commenced. If unsure please speak with your Accounting professional.

200 Shares N.P.V. (Standard)

Every business corporation must designate in its certificate of incorporation the number of shares that the corporation has authority to issue and must state the “par value” of the shares or whether they are without “par value.” Shares without par value may be issued or sold at any price. Shares with a stated par value cannot be issued or sold at a price less than the stated par value. Most corporations are formed with 200 shares no par value (N.P.V.).

Non-Profit Purpose of Corporation

The Certificate of Incorporation must set forth the purpose or purposes for which the corporation is formed. It is sufficient to state that the purpose of the corporation is any purpose for which corporations may be organized under the NPCL, either as a Charitable Corporation or as a Non- charitable Corporation. Alternatively, the Certificate of Incorporation may set forth specific purposes. The Certificate of Incorporation form includes three choices regarding the corporation’s purpose. Check the appropriate box.

If the Certificate of Incorporation sets forth specific purposes, such statement of purposes must include sufficient information for a reader of the document to understand why the corporation has been formed. The Certificate of Incorporation may also set forth any activities that the corporation intends to carry out in furtherance of its purpose or purposes. However, a corporation is not required to set forth such activities or otherwise state how the corporate purposes will be achieved.

Non-Profit Required Consents

Corporations formed for certain purposes require the consent or approval of another governmental agency or office. (See NPCL § 404) When one is required, the written consent or approval must be attached to the Certificate of Incorporation when it is submitted to the Department of State for filing. Complete Paragraph Fourth by checking the appropriate statement to indicate whether any consents or approvals are required.

The following is a partial list of governmental agencies and offices that must consent to or approve the filing of certain Certificates of Incorporation prior to filing with the Department of State. Questions regarding consents or approvals should be directed to the agency or office at the listed address or telephone number. 


Agency or Office Applicable Section of the NPCL and Purpose Requiring Consent or Approval
Office of the Attorney General
Antitrust Bureau
120 Broadway, 26th Floor New York, NY 10271
(212) 416-8436
Section 404(a) – formation of a trade or business association.
Office of Children & Family Services
52 Washington Street Rensselaer, NY 12144
(518) 473-7793
Section 404(b) – institutions for children; care of destitute, delinquent, abandoned, neglected or dependent children; adoption services; establishment or operation of a home or shelter for unmarried mothers; residential programs for victims of domestic violence or the solicitation of contributions for any such purposes.
Department of Health
Division of Legal Affairs
Corning Tower, Room 2482 Empire State Plaza
Albany, NY 12237
(518) 473-3233
Section 404(b) – establishment or operation of any aged care accommodation; adult care facility; enriched housing programs; residences for adults or the solicitation of contributions for any such purpose.
Department of Education
Office of Counsel State Education Bldg. Room 148
Albany, NY 12234
(518) 473-8296

Section 404(d) – operation of a school, college, university or other entity providing post secondary education, library, museum or historical society.
Note: The Department of Education requires a $10 fee to obtain consent.
Public Health and Health Planning
Council Department of Health Division of Legal Affairs Corning Tower, Room 2482
Empire State Plaza
Albany, NY 12237
(518) 473-3233
Sections 404(o) and (t) – establishment or maintenance of a hospital or facility providing health related services or the solicitation of contributions for any such purpose.
Charitable Nature of the Corporation

Indicate whether the corporation is a Charitable Corporation or a Non-Charitable Corporation. The charitable or non-charitable categorization is based on the corporation’s purposes.

A Charitable Corporation is any corporation formed for Charitable Purposes. Charitable Purposes of a corporation means one or more of the following purposes: charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals.

A Non-Charitable Corporation means any corporation formed under the Not-for-Profit Corporation Law, other than a Charitable Corporation, including but not limited to one formed for any one or more of the following non-pecuniary purposes: civic, patriotic, political, social, fraternal, athletic, agricultural, horticultural, or animal husbandry, or for the purpose of operating a professional, commercial, industrial, trade or service association.

A corporation formed for both charitable and non-charitable purposes is a Charitable Corporation.

IRS Language

To qualify for tax exempt status under the Internal Revenue Code, the corporation must be organized for one or more of the purposes specifically designated in the Internal Revenue Code. The Internal Revenue Service will require that certain provisions be included in the corporation’s Certificate of Incorporation prior to granting tax exemption. These provisions are included in the Internal Revenue Service’s Publication 557 – Tax Exempt Status for your Organization.

501 (c) 3 Language

Said organization is organized exclusively for charitable, religious, educational and scientific purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under Section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code.

No part of the net earnings of the organization shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the organization shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in the purpose clause hereof. No substantial part of the activities of the organization shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the organization shall not participate in, or intervene in (including the publishing or distributions of statements) any political campaign on behalf of any candidate for public office. Notwithstanding any other provision of this document, the organization shall not carry on any other activities not permitted
to be carried on (a) by an organization exempt from Federal income tax under section 501 (c) (3) of the Internal Revenue Code, or corresponding section of any future tax code, or (b) by an organization, contributions to which are deductible under section 170 (c) (2) of the Internal Revenue Code, or corresponding section of any future federal tax code. Upon the dissolution of the organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501 (c) (3) of the Internal Revenue Code, or corresponding section of any
future Federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not disposed of shall be disposed of by the Court of Common Pleas of the county in which the principal office of the organization is then located, exclusively for such purposes or to such organization of organizations, as said Court shall determine, which are organized and operated exclusively for such purposes.

The LLC is Managed by

In the formation of a new “LLC” you must choose the management type that will best fit your situation in operating the company. There are two distinct types to choose from. “Member Managed” which is where all the members (owners) participate in running the LLC or “Manager Managed” where only specified members, nonmembers or outsiders are tasked with running the business operations. The default is set to Member Managed as this is by far more common for small LLC’s.


Publication of Legal Notice are required for all New York LLC’s Under Section 206 of the Limited Liability Company Law, publishing is required within 120 days from forming the LLC or the LLC will have their authority to carry on, conduct or transact any business suspended.


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