How to Register a C Corporation
Introduction
A corporation is a legal entity that offers its shareholders (also known as “shareholders”) protection from personal liability for the corporation’s debts. The corporation itself is responsible for paying any financial obligations it incurs and can lose property if it fails to do so. This means that if a creditor sues your business, the creditor cannot seize your home or other personal assets.
Select a Corporation Name
Now that you’ve chosen a legal form and determined your business’s tax status, it’s time to register your business with the state. In most cases, this means registering with the Secretary of State as well as other state agencies.
Next, you need to select a name that doesn’t infringe on another company’s trademark or violate any other laws. This can get confusing because businesses often use similar names without realizing they’re doing so (think “Apple” computers). A good rule of thumb is to make sure your corporation’s name isn’t too close to another business in your area or industry—if there’s even one letter difference between the two names, it could cause legal problems down the line when customers start getting confused between the two companies’ products/services and start suing each other for whatever lawsuits are trending these days.
You also need to make sure that no one else already has registered their own corporation under this same name in your state before filing your application with them; otherwise, you’ll be forced into changing it later when someone else inevitably objects (which could result in more fees).
Prepare your Articles of Incorporation
What are articles of incorporation?
Articles of incorporation are a legal document that establishes your corporation as a separate entity. They include the basic information about your company, including its name and address, along with its purpose for existing. You can use them to incorporate in any state or country where you wish to do business.
How should I prepare my articles of incorporation?
You should always consult an attorney when drafting articles of incorporation because there are many technical details involved in this process (for example, how much money is required to register). However, most states allow online registration through their websites so there’s no need to hire an attorney unless you have specific questions about your state’s regulatory process or would like help with filling out paperwork correctly.
File your Certificate of Incorporation
To begin, you will need to file your certificate of incorporation with the state’s secretary. You can do this yourself or use a lawyer or a service that offers corporate filing services.
- Filing fees: You may be required to pay an additional fee when filing your certificate (e.g., $50-$100).
- Filing requirements: Your name must not be identical to any other corporation in the same state. Additionally, you will be required to provide information about your business and its purpose for being formed as a corporation; if you are using an existing business name, it must end with “Corporation,” “Inc.,” or another term indicating that it is incorporated.
Get an Employer Identification Number (EIN)
Next, you’ll need to get an employer identification number (EIN). This is a tax ID number that’s similar to the Social Security Number used by individuals. You can either go online and create one through the IRS’s website or call them directly at (800) 829-4933. The EIN costs nothing and can be used for any business, including corporations, sole proprietorships, partnerships, trusts and nonprofit organizations. When you register your C Corporation with the state government later on in this process, they will ask for this number as well so make sure that it’s available.
Set Up a Corporate Records Book
You will need to maintain a corporate records book of your corporation. The purpose of this book is to provide a permanent record of all corporate actions, including minutes of board and shareholder meetings, resolutions and actions taken by the board or shareholders, as well as any other official paperwork related to the company’s activities.
The corporate records book must be maintained at the principal place of business and must be kept in either a bound form, or in chronological order on loose-leaf pages.
Hold your First Board of Directors Meeting
The board of directors is the highest level of authority in a corporation. It consists of one or more individuals who make decisions on behalf of the entire company. The board’s duties include:
- Deciding what goals to pursue and how they should be accomplished (i.e., approving strategic plans).
- Approving major contracts, such as lease agreements or contracts with vendors.
- Reviewing financial statements and other reports from management, auditors, and others.
Adopt Bylaws
Adopting bylaws is a good idea, even if you don’t have to. The board of directors may adopt these rules as guidelines for how the corporation should operate. Bylaws are not required by the state or IRS, but they’re highly recommended so that your business is governed wisely and legally.
Bylaws are not filed with either the state or IRS; they’re internal documents that only exist within your company.
Issue Stock Certificates to Shareholders
When you issue stock certificates, you are giving your shareholders ownership of the company. You can issue multiple classes of stock with different voting rights and nonvoting shares. You can also offer options to employees who receive shares in exchange for their labor.
Starting a C Corporation is Quite Easy
- It’s easier to start a C Corporation than you might think.
- You can get legal advice easily and cheaply, but it’s not necessary if you’re just starting out.
- To register your corporation, all you need is $800 in cash and a social security number or other identifying number for your business. You can also choose an existing name for your company if you like, as long as it hasn’t been taken already by another business entity. In some states, this process takes about 20 minutes at the county clerk’s office or online via the Secretary of State website. Many states allow businesses to be formed without filing articles of incorporation first; however there may be additional fees associated with these documents depending on where they’re filed
Conclusion
Once you’ve decided on the name of your corporation, filed for incorporation and obtained an EIN, all that remains is to prepare corporate bylaws, hold your first board meeting and issue stock certificates to shareholders. The process can be completed within days or even hours if the paperwork is already prepared.
