How to start a Corporation
- Create a business name for your business. Make sure that your business name complies with corporation rules in your state.
- Appoint your Board of Directors.
- File your Articles of Incorporation with the Secretary of State (or equivalent agency in your state).
- Create your corporate bylaws so that you could lay-out your company’s rules for operation.
- Hold your first Board of Directors meeting.
- Issue stock certificates to your company’s shareholders.
- Obtain all the necessary licenses and permits that are required for the operation of your business.
Creating a Business Name
Check on your state’s corporation office to check if your business name is available to use. Remember:
- Your company name must not be the same with any other company filed with the state corporation office.
- Your company must corporate designator’s like Corporation (Corp.), Incorporated (Inc.), and Limited (Ltd.)
- Your company name cannot contain certain words prohibited by the state. Such words are Federal, National, United States, or Reserve.
Your initial stockholders are usually the ones responsible for appointing your Board of Directors even before you start your business. The Directors you appoint will be responsible for making major policy and financial decisions for your company. Your directors will authorize the issuance of stocks, appoint corporate officers and set their salaries and benefits, and they are also given the authority to approve loans to and from the company.
Filing Articles of Incorporation
As soon as you have appointed your Board of Directors and have your company name approved, your next step is to file your “Articles of Incorporation” with the Secretary of State (or equivalent agency) in your state. Filing fees usually range between $100 to $800 depending on the state where your business is being established. Your Articles of Incorporation should contain the following basic information about your company:
- Company name
- Office address
- Names of corporate directors
Drafting Corporate Bylaws
You may need to get the services of an attorney with regard to drafting your company’s bylaws. These bylaws will be adopted by your corporate directors at their first board meeting. They will also serve as the ground rules for the day-to-day operations of your company. The bylaws will also determine the schedules of all directors and shareholders.
Holding your first Board of Directors meeting
After appointing your corporate directors, filing your Articles of Incorporation, and creation of your bylaws, the next order of business is for your appointed Board of Directors to hold their first meeting. For your director’s first meeting, their agenda would usually be about:
- Setting the corporation’s fiscal or accounting year.
- Appointing corporate officers
- Adopting the corporate bylaws
- Authorizing the issuance of corporate stocks
- Adopting an official stock certificate form and corporate seal
- If the company will be an S-Corporation, directors would have to approve the election of an S-Corporation status.
As a corporation, you cannot conduct your business until you have issued shares of stocks. Issuing shares of stocks divides ownership interests of the business. This fulfills one of the requirements of the incorporation process. This qualifies your company the legal protection offered by corporate status. In issuing shares of stock you will have to document the following information:
- Names of your initial stockholders
- Number of shares bought by your shareholders
- How shareholders will pay for each share they have bought
Obtaining business licenses and permits
Now that you have done all the necessary steps in starting your corporation, at this point you have to obtain all the necessary licenses and permits needed to operate your business. You must first obtain your business license or what is also known as a tax registration certificate. You may also need to obtain an employer identification number from the IRS, a seller’s permit from your state, and a zoning permit from your local planning board.