How to Form a C Corporation in Tennessee

Introduction

If you’re starting a business, you’ll want to think about how to form it legally. One of the most popular ways is to create a corporation. Corporations are different from LLCs, partnerships and sole proprietorships in that they have some built-in protections for owners or shareholders; they can also be taxed differently than other types of businesses. There are several steps involved in forming a corporation in Tennessee:

Pick a name.

Next, you’ll want to pick a name for your corporation. The best names are easy to remember and not too long or too similar to an existing business (you don’t want someone else suing you). It should also be a name that is not offensive or obscene. Finally, make sure the name is available by checking with the Tennessee Secretary of State’s office or searching online.

Decide how to manage the corporation.

Decide how to manage the corporation. You have options when it comes to who controls the day-to-day operations of your company. You can:

• Adopt a board of directors structure, where shareholders elect a group of people who govern the business on their behalf. These individuals may or may not be employees at all; they could be independent contractors or attorneys with experience in business law. Their role is to make decisions about the company’s overall strategy and direction and approve major transactions like mergers and acquisitions. The board’s primary duty is ensuring that management keeps things running smoothly for shareholders’ benefit—and managing this duty can be challenging as you grow larger in size (and more complex). In general, it’s easier for boards to oversee smaller companies than large ones; once you reach 100 employees or so, it might make sense for you to hire an executive team instead.* Set up managerial control instead by having professional managers run day-to-day operations under guidance from owners/shareholders.* Decide on whether shared ownership would work best for your company: if so, consider incorporating as an LLC (which allows its members/owners great flexibility in sharing profits or losses)

Collect the names, addresses and signatures of your incorporators.

You will need at least one incorporator. In Tennessee, an incorporator can be an individual who is at least 18 years old and a resident of Tennessee, or a corporation or limited liability company that has its principal place of business in Tennessee.

For more information about your state’s requirements for forming a C Corporation in Tennessee, use the Secretary of State’s website [link to:https://tnwebhost.state.tn.us/sos/pages/corp_gov_info.aspx].

File articles of incorporation with the Tennessee secretary of state.

The next step is to file articles of incorporation with the Tennessee secretary of state. This can be done online or in person at a local office. You will need to pay a filing fee, which varies depending on your company’s size and if you are creating an LLC or corporation.

You must also provide information about your business, including the name of the corporation, the address where it will be located and the name and address of an initial agent for service of process (this is typically someone who will accept legal notices on behalf of your company).

Draft bylaws for your corporation.

After you have your articles of incorporation, it’s time to draft bylaws for your corporation. The bylaws are the rules that govern the operation of a corporation and set out the duties of officers and directors, including their responsibilities. For example, if you want to allow shareholders to vote on some matters directly (rather than delegating those decisions to the board), then you’ll need explicit language in the bylaws allowing this.

Bylaws also set out how a corporation will be run: do they have any voting rights? If so, who gets them? Who becomes an officer or director? How many people can serve as officers or directors at one time? Can an officer or director be removed from office due to poor performance (or for other reasons)? How often does a meeting need to be held for shareholders—and what constitutes a quorum?

These questions all come up when drafting bylaws; make sure you address them as part of this process!

Get an employer identification number from the IRS.

You need to get an Employer Identification Number (EIN) from the IRS. An EIN is a tax identification number that you can use to open a bank account for your corporation, which will help with record keeping and allow you to keep track of all its finances. You can apply for an EIN online by visiting the IRS website or calling 1-800-829-4933.

Decide on a fiscal year.

The fiscal year of a corporation is the 12-month period for which it keeps its financial records. It must be the same for all corporations within a group and can be any 12-month period that ends on December 31st, although many companies choose to use a calendar year.

In addition to deciding on your company’s fiscal year, you’ll also need to decide how you want to report your taxes. You have two options:

• A 52/53 week tax year (which starts in January) or
• A 53/54 week tax year (which starts in July).

Issue shares to owners of shares of stock in the corporation based on their ownership percentage in the corporation.

• Issue shares to owners of shares of stock in the corporation based on their ownership percentage in the corporation.
• Shareholders are owners of the company and have voting rights, as well as other rights like receiving dividends and selling their shares.

Create a corporate record book.

The corporate record book is an official log of the corporation’s activities. It includes the following:

• The minutes of all shareholder meetings and members’ voting records
• Actions taken by the board of directors (for example, resolutions passed by a majority vote)
• Actions taken by shareholders (for example, votes cast at a special meeting)
• Actions taken by officers (for example, signing contracts or checks)

In addition to this information about your business’s legal status and actions taken on its behalf, you should include any other documents that are important for you or others to have access to.

Hold an initial meeting of shareholders and directors for purposes of adopting bylaws and electing officers, approving an initial fiscal year and transacting any other business that needs to be done by the corporation’s constituents.

• Hold an initial meeting of shareholders and directors for purposes of adopting bylaws and electing officers, approving an initial fiscal year and transacting any other business that needs to be done by the corporation’s constituents.
• The initial meeting must be held in person or by telephone, with a quorum being present on all matters voted upon at such meeting; provided however that no action shall be taken at a meeting unless a quorum is present thereat.
• In addition to any other requirement for holding an annual or special meeting of stockholders, no action may be taken at any such annual or special stockholder’s meeting unless called for by the board of directors or pursuant to provisions set forth in the articles of incorporation or bylaws (with respect to annual meetings).

Incorporating your business will help you build a solid foundation for growth.

As your business grows, you will want to make sure that it has the proper legal structure in place. Incorporating your business will help you build a solid foundation for growth.

• A C corporation is different from an LLC or S corporation because it has greater tax liability and must file additional paperwork with the IRS each year.

Conclusion

Incorporating your business is a great way to protect yourself and your assets, and it can also help you avoid hefty fines from the IRS. In order to form a corporation in Tennessee, you must first choose an appropriate name for your company and then get it approved by the secretary of state. You will also need to draft articles of incorporation as well as bylaws for your corporation before filing these documents with the state office where they will be reviewed for accuracy before being filed on record by the clerk there. Once this process has been completed successfully, you will receive certificates indicating that your company has been registered with both federal and state governments.