Below are several GENERAL steps required to be taken in order to form and operate a corporation. Note that each state has different requirements and the information listed below may not include or take these specific state requirements into account. The information below is merely illustrative of the primary requirements of forming the corporate business structure.
1. Select A Business Name. Obviously, a business cannot be formed unless a business name has been chosen. Once you have selected a business name, you need to find out whether or not that name is available for your use. All states have laws stating that a company may not use a business name that is the same as or indistinguishable from that of another business. To find out whether a business name may be available, call the office of the Secretary of State in the state that the business will be formed. The vast majority of states also allow the incorporators of a corporation to review corporation names on-line via a simple search.
Most states require that the business name contain the words "corporation", "incorporated", "company", or "limited" or the abbreviation "corp.", "inc.", "co." or "ltd." Some states allow additional names and some restrict the words "limited" or "ltd." Check you state specific requirements.
2. File the Required Documents. After selecting the name, you must prepare and file with the appropriate governmental entity (usually the secretary of state) the corporation's "articles of incorporation" (in some states, this document is called a Charter or some similar name). This document usually lists the name of the corporation, the address of the business, the name and address of the corporation's agent (the person to whom mail or other documents can be delivered) - some states require the names and address of the directors of the corporation and the number of shares of stock that the corporation will have to sell to its shareholders. Along with the articles, a filing fee must be paid - the amount varies by state, ranging from $50 to several hundred.
3. Prepare Internal Corporate Documents. Once the corporation is formed, certain corporate documents should be prepared. A corporate record book should be prepared, so that all of the corporation's "legal" documents can be kept in a single location. The articles of incorporation (along with the documents listed below) should be included in this record book. By-laws and a Code of Regulation should be prepared - these are the rules and regulations governing the shareholders, directors and officers of the corporation. These documents set forth the procedures by which shareholders elect directors and directors elect officers, how the corporation will be operated, how the corporation can borrow money or incur debt, etc.
4. Obtain Federal and State Tax ID Numbers. The Internal Revenue Service requires every corporation to have a federal tax identification number. The federal tax ID number can be obtained from the IRS on line or by fax. Also, most states require corporations to obtain a state tax ID number as well.
5. File An Annual Report, if Required. In most states, an annual statement or report will be required to be filed by the corporation. This filing is required so as to provide the state with evidence that the business is in operation - and, in some cases, to provide revenue information to the state for taxing purposes. Businesses that file to timely file these documents may be charged a penalty.
Again, check your state requirements to ensure that all filing requirements are met for proper corporation formation.
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