The steps to forming a new corporation are not difficult. If you have decided that a corporate structure is the best framework for your new business, you must first take care of the prerequisites. Although the procedure is much the same across the country, it is recommended that you contact the office in your state that handles corporation filings to make sure that you have a thorough understanding of the process involved.
Consider the Corporation
Forming a corporation as the framework for your new business has some advantages. A corporation is a limited liability partnership. As such, it is an entity separate and distinct from those who own it. While a corporation’s shareholders are not held personally liable for the company’s debts, they are able to participate in the company’s profits.
Include the Basics
At a minimum, most states require that the following information be included in the articles of incorporation for your business:
- The name of your new corporation according to the rules of your state
- The address of the principal place of business
- The name and address of the registered agent who can accept delivery of legal documents on behalf of your corporation
- Statement of the corporate purpose
- Stock information, including the number of shares the corporation can issue, along with the designation of classes and the value of each share
Appoint the Directors
Once you have chosen a name for your new corporation, you should turn your attention to appointing directors. These people will make important decisions such as authorizing the sale of the corporation’s stock. Most states allow the corporation to have just one director, but others stipulate that there must be at least as many directors as there are owners of the company.
File the Articles
Articles of incorporation are sometimes called a “charter,” or the “certificate of incorporation,” differences which draw attention to the need for checking with your state concerning legal requirements and the approved filing procedure. In most states, articles of incorporation are filed with the office of the Secretary of State. A fee, generally anywhere between $35 and $300, will be required. In some states, the filing fees are different for a standard corporation versus a nonprofit, the latter of which is usually less expensive to register.
Create the Documentation
Preparing the articles of incorporation for your new business is not a complicated undertaking. As long as you include the basic information, the document you create will likely be accepted by the state agency for filing. You can use bullet points to highlight information. Your longest paragraph might have to do with explaining the corporate purpose. Keep in mind that you do not need to create the articles from scratch. Most Secretary of State websites display pre-printed forms that you can fill out. In addition to filing the articles, you should take the opportunity to obtain any permits or licenses that you will need in order for your company to begin doing business.
Conduct Your First Board Meeting
If you have filed your articles of incorporation, and if there are directors other than yourself, you can set the date and time for your first board meeting. You should write the bylaws that will indicate how your business will be run, and these will probably form the basis for your initial meeting. You can also issue stock certificates to the owners of your corporation. Additionally, the initial board meeting is a good time to discuss how your business will be conducted going forward.
Ask for Help From a Professional
Some people feel that they might miss something important if they attempt to write their own articles of incorporation. If you are uncomfortable with the process, you may want to turn to a professional for help. To make sure the filing of this important document is completed in precise compliance with state law, you can always contact an experienced business attorney for advice and assistance.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.