A Summary of How to Form a Corporation

Every state has its own rules for naming a corporation , but generally your corporate name cannot be identical to another legal entity filed with your state. You must conduct a search to confirm the name you chose is not the same as another registered business in the state and that it does not infringe on a trademark. The name should also include a designation of corporation (Corp.), incorporated (Inc.), or limited (Ltd.). Finally, the name you choose cannot imply a connection to the government or certain restricted business types (such as a bank or charity, unless you can properly register as such an organization).

A corporation is governed by a board of directors that makes the decisions regarding finances and policies. Typically the directors are appointed by the initial owners or shareholders before the business begins operating. Owners of the business can serve as directors, but directors are not required to be owners of the corporation.

A corporation must file its articles of incorporation or certificate of incorporation with the appropriate state office to register the business. If the company will be operating in other states, you must also register the corporation as a foreign entity and pay any applicable fees in those states as well.

A corporation should have bylaws that outline in detail the internal rules that govern the operation of the entity. You should consult with an experienced business attorney to draft the bylaws. Additionally, if there is more than one shareholder in the corporation, a shareholder’s agreement should be drafted. This contract will set forth what occurs if an owner dies, becomes incapacitated or leaves the company.

The above is a summary of the first steps you must take to form a corporation. There are many other tasks that should be handled including conducting the first meeting of the directors, appointing officers, issuing shares of stock, obtaining necessary licenses or permits, and other important duties. A corporate attorney can help you with each of these matters, as well as determining whether you are exempt from securities registration requirements.

The above are just a few examples of issues an attorney can help you with when starting a new corporation. Obtaining the right advice from the start can significantly increase the likelihood of your business being a success. Contact The Swenson Law Firm for help.

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