How to Form a C Corporation in New York
Introduction
It’s easy to form a C corporation in New York. The process typically takes less than two weeks from start to finish, but keep in mind that it can take longer if your company doesn’t have everything you need for filing articles of incorporation (such as a business name). You’ll also want to make sure you’re following proper protocol before filing documents with the state Division of Corporations because failing to do so could result in delays or even rejection.
Check availability of the business name. You can search the New York State Division of Corporations to make sure your potential name is available. You must include one of the following words or an abbreviation in your corporate business name:
The first thing you will want to do is check the availability of your business name at the state level. If a name is not available, you will need to either choose a new one or file for a trade name registration with your county. You can also file for an assumed name certificate (sometimes called an AOC) with the city where you are located. The last step would be filing for an assumed name certificate (AOC) with either your town or village if you plan on doing any business in those areas as well.
Choose a registered agent.You must designate one individual or corporation who has a physical street address in New York where legal process and other official documents will be delivered on behalf of the corporation.
A registered agent is an individual or corporation that has a physical street address in New York where legal process and other official documents will be delivered on behalf of the corporation. The registered agent must accept service of process and keep records of the corporation’s business.
Qualifications:
- Must be at least 18 years old with a physical street address within New York state
- Must have been in business for at least 2 years prior to accepting this role
Prepare and file Articles of Incorporation with the New York Department of State.
Now that you’ve decided on the corporate name, it’s time to file Articles of Incorporation with the New York Department of State. You can file in person or by mail, but if you’re going to do it online (which is recommended), be sure to check first for name availability. The filing fee for a corporation is $100, though it’s free if you’re starting up a nonprofit organization.
Once you’ve filed your Articles of Incorporation and paid any associated fees, your corporation will become official!
Create a shareholders’ agreement. Shareholder agreements are optional but recommended as they set forth each shareholder’s rights, responsibilities, and obligations.
The shareholders’ agreement is a contract between the shareholders and should reflect your business needs. For example, if you’re operating in a highly regulated industry or have multiple investors who are not family members, then you may want to include provisions that establish voting rights for each shareholder. You can also use the shareholders’ agreement to allocate profits and losses, as well as other issues that may arise over time. For instance, if one investor wants out of an investment but there’s no good reason for him/her to sell at this particular time (e.g., because of market conditions), then the other shareholders could force them to sell their shares early by amending the shareholder’s agreement so that it requires all owners must agree before selling any shares back or liquidating their interest in the business.[1]
Hold an organizational meeting to adopt bylaws and elect officers. Corporations must adopt written bylaws that govern its operations. The shareholders elect a board of directors at the organizational meeting or set a date for an election at a later date within 13 months after incorporation. The board of directors then adopts initial resolutions to approve various company actions such as issuing stock, entering into contracts and adopting corporate policies including opening bank accounts, borrowing funds, and hiring employees (to name just a few).
A corporation sets its own rules, called “bylaws” that govern the operation of its business. The board of directors adopts bylaws at an organizational meeting (also known as a special meeting). The shareholders also adopt bylaws at this time or at some later date within 13 months after incorporation.
- What is an organizational meeting?
The organization of a new corporation begins with an organizational meeting, which may be held anywhere in New York state. At this meeting, the shareholders vote to adopt articles of incorporation and elect directors who will oversee operations until they reach their first annual shareholder’s meeting (see below). A quorum for this election consists only of those shareholders present in person or represented by proxy holders who vote on elections.
- What is a board of directors?
A company’s board consists entirely of directors elected by its shareholders; these people have no financial interest in the corporation except as remuneration for their services as officers or employees.* What are officers?
Obtain Federal Employer Identification Number (FEIN) from IRS. A unique nine-digit number assigned by the IRS to business entities operating in the United States for the purposes of identification
Obtain a Federal Employer Identification Number (FEIN) from the IRS. A unique nine-digit number assigned by the IRS to business entities operating in the United States for purposes of identification and communication with that entity. Regardless of whether you’re forming a corporation, LLC, or partnership, you will need an FEIN before you can proceed with any other steps on your journey to incorporation.
Where to file Articles of Incorporation
The New York State Division of Corporations handles all filings for corporations in the state. The Division divides its functions into three sections:
- Business Entity Services, which handles general information about forming a business entity and maintaining its existence
- Corporate Filings, which deals with filing articles of incorporation or annual reports
- Corporate Name Availability, which provides a list of available names for new companies to choose from when filing their paperwork
Conclusion
We hope this article has been helpful in your quest to start a C Corporation. If you have any questions, please contact us at help@nycbusinesslawyer.com or (212) 951-3100 and we will be happy to assist you!
