Forming a corporation can be an exciting time in the life of a business. It can also be lots of work. In order to become a corporation, your business will need to file documentation in the state of your choosing.
You can file documentation for your corporation in any state you want. Some states have favorable fees or taxes that you may be able to take advantage of. It’s important to do in-depth research, though, since other states, including your home state – if you’re not registered there – may charge you a fee to do business within that state.
Here are the most common documents you’re required to file for corporate entity formation in most states.
Articles of Incorporation
Whether you’re forming a C corporation or an S corporation, you typically need to file Articles of Incorporation, sometimes called a Certificate of Incorporation. You should be prepared to provide the following information on your business:
- Corporate name – usually includes an identifier, such as “Corporation,” “Incorporated,” “Company” or “Inc.”
- Business purpose – outlining what your business does or provides
- Registered agent – see more below
- Incorporator – the person or company preparing and filing the Articles of Incorporation
- Number of authorized shares of stock – not necessarily the number of issued shares, as you may withhold some unissued shares to add owners later on
- Share par value – the minimum stated value of each share, which may be different from the actual, fair market value
- Preferred shares – as opposed to common stock
- Directors – names and contact info for your corporation’s initial directors
- Officers – those responsible for the corporation’s day-to-day activities
- Legal address of the company – optional in many states, required in some
All the information in the Articles of Incorporation is made available to the public, so anyone has the right to access it.
Corporate bylaws outline specifically how you plan to conduct your business. Bylaws include issues of corporate governance, including how the board of directors will function, how stock is to be administrated, how meetings will be conducted and how often they will be held, procedures for corporate recordkeeping, the fiscal year of the corporation, how financial audits will be conducted, and rules on approval of contracts, loans, checks and other matters.
In some companies, the bylaws are written by the owners, while in others they’re written by the board.
Unlike the publicly available Article of Incorporation, corporate bylaws are private documents meant for your company’s leadership only.
In most any state, corporations are required to have a registered agent located in the state of incorporation. The registered agent acts as the discrete handler of important legal and tax documents on behalf of the corporation and must be available during normal business hours. Your registered agent is your liaison with state government and is qualified to receive tax forms, service of process notices, correspondence from the Secretary of State, other official government notifications, and notices of lawsuits.
Having a registered agent means you save yourself the embarrassment of accepting legal and tax documents in front of customers or clients. Registered agents must have physical addresses (and not P.O. boxes). Since your registered agent’s address won’t change, you can freely move the location of your business without necessarily having to file more paperwork with the state. Registered agents often help corporations with compliance issues as well.
A knowledgeable accountant can help you prepare your Articles of Incorporation and your corporate bylaws. Consider consulting an accountant early in your business planning process.