Bylaws may sound like a complex legal document. While bylaws can be complex, they don’t have to be that way. Larger corporations typically have long bylaws, as there are a lot of moving parts that need to be addressed. Small corporations can opt for simple bylaws that still cover the essentials.
Bylaws are a separate document from your corporation’s articles of incorporation. Articles of incorporation are filed with your state when you incorporate. Corporate bylaws aren’t required by every state, but writing and adopting bylaws is a good business practice regardless of the size of your corporation.
What Are Bylaws?
Bylaws outline the structure of your corporation. They serve as a set of rules for your organization and outline the purpose of your organization, who is in charge of the organization, how decisions are made within the corporation and the role of shareholders within the organization.
Bylaws for a single-shareholder corporation will typically be very simple, as there is one person fulfilling all the roles within the organization. It is still good practice to have (and follow) your corporate bylaws, though, even if your corporation is a party of one. In small corporations, the incorporator will typically write the bylaws, but in larger corporations, the board of directors will typically write and adopt the bylaws.
What Should Bylaws Include?
Your state may specify the information that needs to be included in your bylaws. In general, though, bylaws include:
- Your business’s name and address.
- Information about the board of directors.
- Information about the corporate officers.
- How shares and stock are issued.
- How often shareholder meetings are held.
- How often board meetings are held.
- How to amend the bylaws in the future.
Information about the board of directors and corporate officers should include their roles in the organization and how they are replaced. The bylaws should also address how to deal with conflicts of interest, who can take action on behalf of the corporation, how records will be kept and the fiscal year of your corporation.
How to Write Simple Bylaws
Given how much needs to be included, writing simple bylaws may seem intimidating, and there is no bylaws template in Word to follow. You can find templates by doing an online search for “bylaws template,” but that may not yield the most reliable results.
Another option is to use bylaws from other similar corporations to write your own bylaws. You can do an online search for bylaw examples or contact local business organizations for assistance, such as your district small business administration office. You should review the bylaws from at least two or three corporations to get a sense of what you need to include and how to structure your bylaws.
You can also consult an attorney. Although this is an added expense, an experienced business attorney should be able to write simple bylaws quickly. Alternatively, you could write your own and have an attorney review them for any potential issues. This would be the best approach for ensuring your bylaws meet your state’s legal requirements.
Reaching Consensus on Bylaws
Once your corporation bylaws have been written, your board of directors will need to approve them. For a single-shareholder corporation, this is a simple process, but a larger board of directors may request several changes. You may want to have an attorney present to address those changes. You can also record the changes and review them with the attorney.
To reach consensus, give everyone ample time to review the document and ask any questions. Take the time to address those questions and any concerns that board members may have. Since the bylaws will govern how your corporation operates moving forward, it’s worthwhile to take the time to build consensus on your bylaws.