How to Form a Corporation

To form your own corporation, you must take these essential steps.

If you ‘ve sorted through the many types of business structures and decided to create a pot, you ‘re facing a tilt of important—but manageable—tasks. hera ‘s what you must do :

  1. Choose an available business name that complies with your state’s corporation rules.
  2. Appoint the initial directors of your corporation.
  3. File formal paperwork, usually called “articles of incorporation,” and pay a filing fee that ranges from $100 to $800, depending on the state where you incorporate.
  4. Create corporate bylaws, which lay out the operating rules for your corporation.
  5. Hold the first meeting of the board of directors.
  6. Issue stock certificates to the initial owners (shareholders) of the corporation.
  7. Obtain any licenses and permits that are required for your business.

For each state ‘s specific rules on forming a corporation, see 50-State Guide to Forming a corporation .

    Choosing a Corporate Name

    The list of your corporation must comply with the rules of your country ‘s corporation division. You should contact your state ‘s position for particular rules, but the follow guidelines normally apply :

    • The name cannot be the same as the name of another corporation on file with the corporations office.
    • The name must end with a corporate designator, such as “Corporation,” “Incorporated,” “Limited,” or an abbreviation of one of these words (Corp., Inc., or Ltd.).
    • The name cannot contain certain words that suggest an association with the federal government or restricted type of business, such as Bank, Cooperative, Federal, National, United States, or Reserve.

    Your state ‘s corporations office can tell you how to find out whether your proposed identify is available for your use. Often, for a little tip, you can reserve your corporate name for a short period of time until you file your articles of incorporation .
    Besides following your state ‘s corporate appoint rules, you must make certain your identify wo n’t violate another company ‘s trademark. For information about trademark law and general advice on picking the good business mention, see Nolo ‘s article How to Name Your Business .
    once you ‘ve found a legal and available name, you normally do n’t need to file the name of your commercial enterprise with your state. When you file your articles of incorporation, your clientele identify will be mechanically registered .
    however, if you will sell your products or services under a different name, you must file a “ assumed ” or “ assumed ” list argument with the state or county where your business is headquartered. For more information, see Nolo ‘s article Registering Your occupation identify.

    Appointing Directors

    Directors make major policy and fiscal decisions for the corporation. For exemplar, the directors authorize the issue of stock, appoint the corporate officers and set their salaries, and approve loans to and from the pot. Directors are typically appointed by the initial owners ( shareholders ) of the pot before the business opens. Often, the owners just appoint themselves to be the directors, but directors do not have to be owners .
    Most states permit a corporation to have fair one conductor, regardless of the number of owners. In other states, a pot may have one director only if it has one owner ; a corporation with two owners must have at least two directors, and a corporation with three or more owners must have three or more directors .

    Filing Articles of Incorporation

    After you ‘ve chosen a name for your business and appointed your directors, you must prepare and file “ articles of incorporation ” with your state ‘s bodied file office. typically, this is the department or secretary of state ‘s office, located in your state ‘s capital city. While most states use the terminus “ articles of incorporation ” to refer to the basic document creating the corporation, some states use other terms, such as “ certificate of internalization ” or “ lease. ”
    No department of state requires a pot to have more than one owner. For single-owner corporations, the sole owner plainly prepares, signs, and files the articles of internalization himself. For co-owned corporations, the owners may either all polarity the articles or appoint merely one person to sign them. Whoever signs the articles is called the “ incorporator ” or “ promoter. ”

    Articles of internalization do n’t have to be drawn-out or complex. In fact, you can normally prepare articles of incorporation in just a few minutes by filling out a form provided by your submit ‘s corporate filing function. typically, the articles of incorporation must specify just a few basic details about your pot, such as its name, principal position address, and sometimes the names of its directors. To learn more about the costs of filing the articles of internalization, see Nolo ‘s article, How a lot Does it Cost to Incorporate Your Business .
    You will credibly besides have to list the name and address of one person—usually one of your directors—who will act as your pot ‘s “ registered agent ” or “ agent for service of march. ” This person is on file so that members of the public know how to contact the corporation—for example, if they want to sue or otherwise involve the pot in a lawsuit .
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