I know you’ve heard of an LLC right? If you’ve been reading my blog posts and watching my videos for a while then I know for sure you’ve heard of a sole proprietorship.
But do you know what an C Corp is and how to start one? Well in this video and blog post I will be going over these steps and give you a solid over view on what steps to take to start a corporation
Step 1. Choose your Business name.
I know you’ve heard me state this before that you need to choose your business name but with starting a corporation it’s a little different. Your name can not sound or look like anyone else’s. It has to be really original. You can search name availability online at the website of the Secretary of State or other state agency responsible for business filing.
Each state is different and has specific rules you must follow when it comes to a corporations name.
Two rules of thumb when it comes to create a corporations names.
A. You must have identity identifiers in
Your business name like Inc or incorporation, Co. or corporation and Limited or Ltd.
B. You can’t have anything like FBI,
State department or treasury in your business name.
2. Appoint Initial Directors
You will need between 1 – 3 board members to set up your board of directors. Every state is different so confirm with your particular state to know what the requirements are for board members. Don’t worry too much about who is on your board at the start of your corporation you can always swap them out as time goes on.
3. File Articles of Incorporation
This is imperative. Without filing your articles of incorporation you have no corporation. In most states you can complete The filing of these legal papers online but if you can’t then you must go down to the Secretary of State.
- The articles of incorporation includes.
- Your corporation’s name
- Its principal place of business
- Its purpose
- The name and address of the registered
- Agent who will accept the service of
- Legal papers on your corporation’s behalf.
- The names and addresses of incorporators and initial board members.
Once the articles are approved, you will receive a certificate of formation. Remember every state has a different set of documents that are required to complete your incorporation of your business.
4. Draft Corporate Bylaws
Before or after you’ve completed and submitted your corporate formation documents you can draft your bylaws. Either way you must have them. Even though some states don’t require you to have bylaws to be recognized as a corporation you still should create them in the beginning to set a tone for your business.
The Bylaws Should include as follows:
- Where and When dividends are paid to shareholders.
- The percentage of shareholders needed to make decisions.
- Where a when annual shareholder meetings will happen.
- How decisions in your business will be made
- The roles assigned to each officer in your company.
Its a good idea to find out what needs to be included in your specific state and get your a corporate lawyer to make it easier on you.
5. Hold The First Board of Directors’ Meeting.
Now the dust has settled and all the paperwork has been submitted and your an official corporation. Hold your first official board of directors meeting. Be sure to follow the guidelines in your Bylaws.
At this meeting you set the ground work to build your corporation on. The directors authorize the issuance of stock, establish the fiscal year of the corporation, appoint the officers to officially run the company and usually appoint the permanent board of directors. Minutes of all board meetings should be recorded and kept with the corporation’s records.
6. Issue Stock
When it comes to stock its a good idea to get advice from a small business lawyer toake sure you are complying with all regulations of the SEC when you issue stock.
A few things that you must do though. You must keep a record of the shares issued to each shareholder and the price paid. The number of authorized shares is stated in the company’s articles of incorporation.
7. Draft A Shareholders’ Agreement
Even though this is absolutely optional this will actually save you a lot of headaches in the long run for your business. Shareholder agreements are basically another term for contract. It will determine a few things like what happens when a shareholder leaves the company, retires, dies or becomes disabled.
It’s best to get a small business lawyer who can tailor the shareholders’ agreement to your company’s specific needs and wants.
8. Get A Employer Identification Number
This can be done on the IRS website and it can be done easily and quickly. All corporations are required to have a EIN and it will give you the ability to open a bank account, file taxes and set up payroll withholding.
9. Get Business Permits and DBAs
Most all business’s have to have some type of licensing and or permit so make sure you check with your local government to figure out what type you will need for your particular type of business.
You can also check with the Small business Administration and check the chart of industries to find out what federal licensing you will need to run your corporation.
All states require DBAs if you’re going to use a different name for business other then the name of your corporation. If your not and you plan on doing business under your corporation’s name then you should be good to go.
Make sure to check with a small business lawyer before making any moves that you’re unsure of. This video and post is for entertainment purposes only and I am not a lawyer.
If you’re interested in getting funding for your business or business credit check out the link here.
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