The process of incorporating your business will differ based on which state you’re doing business in, and whether you’re launching a new corporation – or converting an existing business entity into a corporation. Below are some basic steps for incorporation. It’s not complicated.
1. Choose a business name:
You’ll want to make sure that the name you choose for your corporation is not already in use by another business. You can search for business names online through the Secretary of State’s website in the state where you plan to incorporate.
2. File Articles of Incorporation:
The Articles of Incorporation (also known as a Certificate of Incorporation or Charter) is a document that officially creates your corporation. This document will include information such as the corporation’s name, address, and the names of its directors.
3. Appoint directors:
The board of directors is responsible for making major decisions on behalf of the corporation. You’ll need to appoint at least one director, and you can do this by filing paperwork with the state.
4. Hold a meeting of the board of directors:
The first meeting of the board of directors is where important decisions about the corporation will be made, such as adopting bylaws, electing officers, and authorizing the issuance of stock.
5. Issue stock:
Stock represents ownership in a corporation, and it can be issued to shareholders in exchange for money or other property. The process for issuing stock will vary depending on the state in which you incorporate.
6. Comply with ongoing requirements:
After incorporation, there are certain ongoing requirements that must be met in order to keep your corporation in good standing. These requirements vary by state but may include things like holding annual meetings of shareholders and filing annual reports.
There are a few key things to keep in mind when incorporating:
1. Make sure you choose the right business structure for your needs.
2. Make sure you comply with all the requirements for incorporating in your state.
3. Be aware of the ongoing requirements for maintaining a corporation in good standing.
- A corporation must file annual reports with the state and pay a franchise tax. Many states require that corporate minutes be kept, as well as other corporate records. The officers of a corporation will be held accountable for any illegal action taken on behalf of the organization, so it is important to be sure that you are familiar with the legal requirements for corporations.
4. Understand the responsibilities and liabilities of directors, officers, and shareholders.
- Corporate officers are responsible for the management of the corporation and are liable for any illegal actions they take on behalf of the organization. Directors may be held liable for breach of fiduciary duty or conflict of interest if they make decisions in their own self-interest rather than in the best interest of the corporation. Shareholders may be held liable if they have personally guaranteed a loan or have given personal guarantees for corporate debts.