As a businessperson, if you have decided to create your own corporation, there are some very important requirements to be met. Please, consider these suggestions as they they will surely help you get started.
Naming your Corporation.
If you must start somewhere, it surely is here. You have to choose a name for your corporation. This requirement must comply with the state’s corporation divisions. Below is a general guideline that usually applies.
There can be no other similar or equal name registered. Also, 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.) and may not contain certain words that suggest an association with the federal government or restricted types of business.
In case you have fulfilled the above-mentioned requirements for the name of your corporation, the state’s corporate division office will let you know. Usually, after that, you can reserve the corporate name for a short period of time, while you file the articles of incorporation. To file the name of your business is not mandatory; at the moment you file your articles of incorporation, the business name will be registered automatically. However, if you pretend or have in mind to carry out your business activity under a different name, you have to file a fictitious named or assumed name statement with the state or county where your company is domiciled.
Appointing Directors.
Directors are responsible of making major policy and financial decisions for the corporation. To authorize the issuance of the stock or to approve loans to and from the corporations are some of their duties. Typically they are appointed by the original owners. What usually happens is that owners appoint themselves to be directors, but it doesn’t mean that directors have to be owners.
The number of directors will depend on the state. Some allow only one; others mandate that the number of directors should be based on the number of owners.
Getting the Articles of Incorporation filled.
To file the articles of incorporation with your state’s corporate filing office is the next step. You must comply by going to the department or secretary of the state’s office, located in your state’s capital city. Some states refer to the basic document rating the document as a Certificate of Incorporation or Charter.
You can create and prepare your articles of incorporation by filling out a form provided by your state’s corporate filing office. This really is not that complex. This document must specify some details about your business entity, such as the name, main office address and, in some cases, the name of its directors, and the registered agent information.
The internal rules that govern the daily operations of the corporation are called bylaws. to create it you can hire a lawyer in your state to draft them for you or follow the instructions in a self-help resource.
Shareholder’s agreement.
A shareholder’s agreement may be very helpful for a small corporation, this is because it helps owners to decide and plan upon any upcoming events like the death or retirement of one of the owners, for example.
So, it is very important to hold a first meeting of the Board of Directors to: set the corporation’s fiscal or accounting year, appoint the corporate officers, adopt the corporate bylaws, authorize the issuance of shares of stock, and adopt an official stock certificate form and corporate seal.
For an S Corporation, additionally, the directors should approve the election of S corporation status.
Stocks & Shares.
Doing businesses until after having issued shares is a must to qualify for the legal protections offered by the corporate status and it is a requirement. Once you are ready to issue the actual shares you will have to document the following:
- the names of the initial shareholders,
- the number of shares each shareholder will buy,
- and how each shareholder will pay for their shares.
Once you get this done, you will prepare and issue the stock certificates. Some states may also make you file a notice of the stock transaction.
Permits and Licenses.
The last step is to obtain required licenses and permits such as a business license and an employer identification number from the IRS (EIN), a seller’s permit from your state, or a zoning permit from your local planning board.