by Pat Hill
If you have decided that the limited liability and the tax structure of a corporation are right for your business, the next step is actually forming the corporation. The law of the state in which you incorporate will dictate exactly what you need to do, but the steps are basically the same. The following outlines what steps you'll need to take to form a corporation.
Articles of Incorporation
The Articles of Incorporation set out the basic information about the corporation. This includes the name of the corporation, the purpose of the business, the number and type of shares authorized, the names of shareholders, the names and addresses of the initial officers and directors, the name of the authorized agent, and the name of the incorporator. The Articles of Incorporation are filed with the State, usually the Secretary of State's office. Check out the forms section of AllLaw.com to see a sample form of Articles of Incorporation.
Bylaws
Bylaws are the document that regulates how the corporation will be run. It covers things such as how often and when shareholders' and board of directors' meetings will be held. It will provide for how much notice should be given prior to a meeting and in what manner notice will be given. This document also sets forth the rules regarding how many shareholders or directors are needed to establish a quorum and how much of a majority vote will be required to take certain actions. For example, the Bylaws may state that a simple majority is all that is necessary to take most actions, but that a two-thirds majority is required to amend the articles of incorporation. The bylaws will also provide for the mechanism by which the bylaws may be changed. For example, bylaws may be changed with the approval of a two-thirds majority of the shareholders. A sample form of Bylaws may be found at AllLaw.com as well.
First Director's Meeting Minutes
The Minutes of the first meeting of the Board of Directors should be prepared in advance. They will cover all of the business that needs to be conducted at that first meeting. The bylaws of the corporation will be adopted. Shares in the corporation will be issued. Authority will be granted to open a bank account and to conduct business in the name of the corporation. Click to see a sample form of First Director's Meeting Minutes.
Those are just the basic steps to forming a corporation. Depending on how you want ownership of your business to be structured, there may be other steps you should take. You may want stock transfer agreements that set out who can own stock in the corporation and how and under what circumstances stock can be sold. You may also want shareholder voting agreements that specify how certain shares of stock will be voted at shareholder meetings. These types of arrangements should be made concurrently with the formation of the corporation. An attorney who practices business law can help you with the preparation of all of these documents.
- Alternative Forms of Incorporation Not every corporation is a C-Corporation or an S-Corporation.
- Checklist for New Corporations Incorporating is just one step in starting a new business.
- Choosing Between Corporation and Limited Liability Company LLCs allow a business to have the limited personal liability of a corporation as provided by state law, while being treated as a partnership for purposes of Federal tax laws.
- Conducting Your Business as A Corporation The limited personal liability of a corporation isn't iron clad.
- Corporations compared to LLCs Limited liability companies are a relatively new type of business entity that combine the personal liability protection of a corporation with the tax benefits and simplicity of a partnership. However, there are still other important differences.
- Corporations Compared to Sole Proprietorships and Partnerships Corporations enjoy many advantages over partnerships and sole proprietorships. But there are also disadvantages.
- Forming A Corporation: The Basics This article outlines what steps you'll need to take to form a corporation.
- Forming a Corporation The life of a corporation begins upon the filing of articles of incorporation with the secretary of state's office.
- Operating a Corporation The most important thing to know about operating a corporation is to leave a paper trail of the important business activities.
- The Pros & Cons of S-Corporation Status If the number of shareholders in your corporation is small, you may think that becoming an S-Corporation is the right move, but you should weigh the advantages and disadvantages first.
- S Corporations An S-corporation is a corporation that elects to be treated as a pass-through entity (such as a sole proprietorship or partnership) for tax purposes.
- S-Corporation or C-Corporation - Which Should You Choose? Each has different advantages and requirements. Find out more.
- What is a corporation? A corporation is a separate and distinct legal entity.
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