How to form a C-corporation for Retail

Introduction

If you’re forming a corporation for retail, you’ll need to follow some specific steps. The good news is that a C corporation offers many advantages over sole proprietorships and other types of businesses. However, complying with federal and state tax laws can be complicated, so it’s important to get help from a tax attorney.

Register your corporate name

You can register a DBA (Doing Business As) name, which is a fictitious name, or a trading name. If you plan to register your corporate name with the state and county governments in which you will be conducting business, then you must use the same entity name that’s listed on the Articles of Incorporation form.

If you’re not sure what type of registration is best for your retail business, talk with an attorney to ensure that everything goes smoothly when filing forms with government agencies.

File Articles of Incorporation

To file articles of incorporation with the secretary of state, you will need to provide them with the name of your business, where it’s located, and its purpose. You’ll also have to pay a fee. If your company will be selling products or services online, make sure you check that your state allows this.

Once you’ve filed these documents with the appropriate government offices, copy them (along with any additional forms) and send all copies to:

• The IRS at P.O. Box 2700 Sioux Falls,
• Your state’s department of revenue if one exists.

Choose an incorporator

An incorporator is a person who signs your articles of incorporation. The incorporator can be either a natural person (a human being) or a corporation. If you have multiple people assisting in forming your business, each should sign as an individual incorporator (not on behalf of their company).

• The incorporator must not be a minor—that is, under 18 years old.*
• The person signing the articles may not be bankrupt.*

Select a registered agent

If you’re forming a corporation, it’s not enough to simply file the paperwork; you also need to make sure your business is in compliance with all state and federal laws. The easiest way to do this is by using a registered agent. A registered agent is a person or company who agrees to receive official documents on behalf of your company, such as legal notices and tax documents.

Here are some things you should know about registered agents:

• They can be any type of person or business entity (including one owned by yourself).
• You can choose any registered agent that accepts your business as their client.
• Some states require that only certain types of entities use registered agents as part of their incorporation process, while other states don’t have these requirements at all. If yours doesn’t have any restrictions, then you have more options when searching for one!

Pick your directors and officers

Directors and officers can be elected by shareholders or appointed by a board of directors. In some states, directors must be shareholders; in others, you can elect non-shareholder directors if you wish. Officers have duties similar to those of corporate managers: they oversee employees and make sure that the business is running properly on a day-to-day basis.

Directors don’t need to own any stock in the company; they simply serve as fiduciaries responsible for overseeing its activities on behalf of shareholders. Officers receive compensation for their service as well as benefits such as health insurance coverage paid by C corporations through wages paid to officers.

Determine capitalization, stock, and the valuation of each stock class

You’ll need to determine how much money you need to raise and how much equity you want your investors to have. How much equity do you need to have yourself? How many shares should be allocated to founders, employees, investors, and other stakeholders? The value of each share can vary depending on what type of company it is and its stage in development.

Hold your first board of directors meeting

• How and when to hold board meetings
• Who should attend and how to notify them
• What to discuss at the meeting
• How to prepare for the meeting

Issue shares of stock to investors

When you form a C corporation, the company sells ownership interests in the business by selling shares of stock. The two major types of stock are common and preferred. Common stockholders own an equal percentage of voting rights and receive dividends before any distributions are made to holders of preferred stocks. Preferred shareholders have certain financial rights that differ depending upon the type of preferred share they hold; some types include cumulative perpetual preferred shares (which pay their dividends until their face value is paid) or noncumulative perpetual preferred shares (which don’t). After issuing shares, you must keep records showing who owns those shares so that you can make dividend payments on schedule and transfer them when necessary.

Conclusion

I hope this article has helped you understand the basics of starting your own retail company. If you’re looking for more information, check out our website for further reading!