How to Form a Corporation ?

Answer 1

Many business owners choose to form corporation for a variety of reasons. If you are considering formation a corporation, you may want to consider the process to decide if you are prepared and able to complete the process without an attorney.

First, you will need to have a name for the corporation. Check with your state’s office for the rules on naming a corporation but generally you will need to choose a name that is not already being used. The name you select cannot be the same as the name of any other corporation on file. The name also must end with the words “Corporation,” “Incorporated,” or “Limited,” or any of the appropriate abbreviations. There are also terms that cannot be used such as Bank, United States or Federal.

In order to form a corporation you will also need to appoint directors who will make policy and financial decisions for the corporation. The duties include authorizing issuance of stock and setting salaries. Typically, the owners of the business appoint themselves as directors but they are not required to be.

Articles of Incorporation will need to be filed for the corporation with the secretary of state in your state’s capital city. Articles of Incorporation may also be referred to as a certificate of incorporation or a charter. Usually, this is a standard form to be completed that includes the owner’s and co-owner’s (if any) names, signatures and office address. The Articles of Incorporation usually include a fee for filing of $100 to $800 depending upon the state office that you are filing with.

Bylaws are then prepared for the corporation which are the rules that govern the operations of the corporation. Often, the corporate bylaws can be prepared by following any number of self help resources or an attorney can draft them for the corporation. A Shareholder’s Agreement is also prepared which designates the plan in the event an owner retires or leaves the corporation.

Corporations will need to hold a First Meeting of the Board of Directors to handle further decisions in setting the corporation’s fiscal year, appointing officers and adopting an official stock certificate and corporate seal.

In the final steps of forming a corporation, you will need to issue shares of stock to divide the ownership interests in accordance with securities laws and obtain any necessary licenses and permits for starting new businesses.

If you are not certain about handling any of the steps in forming a corporation, you may wish to consult with an attorney that handles business matters.

Answer 2

When creating a business entity, one should seek qualified legal advice and consultation. Incorporation must be done with meticulous care and attention to detail. A corporation formation attorney is skilled at setting up many types of business structures, including corporations and s-corporations.

There are many types of corporations, and an attorney is in the position of knowledge with regard to advising clients about which type of corporation would best serve their interests and desires for that business operation. Incorporating a business provides several advantages, including the limitation of liability, which protects investors, shareholders and employees from responsibility of corporate debts that are owed to creditors.

In the eyes of the law, corporations are viewed as being a fictional, legal, or moral person, but not a natural person as are human beings. As a separate business entity, the corporation can act as a person to conduct business, acquire assets, make contracts, and have a perpetual lifetime. It can be a subsidiary of another corporation or be independent on its own standing. The corporation has a legal personality. Liability is limited to protect investors and employees, the corporation can issue and sell shares of stock, and it can be run by managers who answer to a board of directors.

The term 'corporation' is taken from the Latin word corpus, which refers to a body or a body of people. It has human-like rights and can initiate legal actions against people or other businesses. Its birth certificate is a certificate of incorporation, and a death certificate would be the legal dissolution of the corporation. Both of these documents must meet strict legal requirements, and should be created by a licensed corporation formation attorney. Corporations can be taxed and sued, and they can be convicted in criminal court for serious offenses.

Another characteristic unique to corporations is their ability to achieve perpetual succession. Recent laws that apply to corporations and their operations dictate privatization of publicly or government owned corporations, deregulation of activity, and policies that enhanced the development of conglomerates. In the event of liquidation, creditors are granted first access to corporation assets.

The special requirements of incorporation require creation of a charter and the appointment of a legal registered agent. Articles of incorporation must be filed with the government. A corporation is considered to be a citizen of the state in which it is headquartered. Appointed board of directors write up corporate by-laws to govern the operation of the corporation. The corporation may be a for profit operation or a non-profit corporation. It can be publicly traded or a closely held private corporation.

A corporation has special legal status as an independent entity. It is separate in the eyes of the law from its members, with its own liabilities and privileges. Under corporate law, the new corporation is granted a charter for business operations. A group or individual that wants to establish a new corporation would fare well to include the assistance of a licensed corporation formation attorney in the set up of that business entity to avoid future legal issues and problems.