This type of business structure offers challenging roles and team building tasks. There are a lot of decisions to make and steps to follow during the process of establishing a corporation. The following are steps you must do:
Create a corporate name
When you make a name for your corporation, you must abide by the specific rules of your state’s corporation division. It is crucial to know the following guidelines:
- The name should not match with the other corporation’s name.
- The corporation name must end with a corporate designator like “Corporation”, “Incorporated” or “Limited” which can also be in abbreviated form.
- Words like Bank, Cooperative, Federal, United States, National, or Reserve are prohibited by most states in the US to be present in the corporate name.
- You can reserve your corporate name temporarily for a small fee until you submit your articles of incorporation. Furthermore, your business name will be automatically registered once you’re done filing articles of incorporation.
In most states, they require corporations regardless of the number of owners, to have one director. Directors are normally appointed to create significant policy and financial decisions for corporations. Directors may also appoint corporate officers, set payments, approve the issuance of stock and loans to or from other corporations.
File articles of corporation
For some states, it is called “certificate of formation” and “charter”. Usually, the filing office of State Corporation takes place at the Department of Secretary of State’s office.
Articles of the corporation must have the specified basic details of the corporation like name, address and its directors. It doesn’t need to be complex or lengthy. Upon filing, a director may act as corporation’s “registered agent” or “agent for service of process”.
It is crucial that the registered agent is part of corporations to the public to have a contact of the corporation in case of lawsuits.
Create corporate bylaws
Every corporation must have internal rules to govern the daily operations or transactions of the corporation. The creation of Corporate Bylaws is normally done through hiring a lawyer or self-help resource. Rules and regulations stated in the bylaws are usually presented and adopted by the directors at the first board meeting of the corporation.
Issue shares of stocks
The corporation will not operate as a business without issuing shares of stocks. Ownership interests in the business are divided up when the corporation has formally issued shares of stocks. It is essential that issuing shares of stocks are made in accordance with securities laws. In other words, the stock issuance must be registered with the federal Securities and Exchange Commission.
Permit and tax registration
This process is the last step in forming a corporation. This is a way to go to the corporation to operate with legitimacy and legal basis. This requirement must be completed by obtaining an employer identification number from the IRS for a seller’s permit.
It is a simple process to create a corporation. See to it that the articles and the legal documents are accurate before submitting to the state office. Find out how long it would take for the process to be completed. This is to enable you to plan your actions ahead.