There are several crucial steps that a person must follow to ensure the proper formation of a corporation. Depending on where you live to form a corporation you may have to follow specific guidelines for your corporation to be approved and allowed to perform its functions within that geographical location.
Before starting on the legal process ensure you have met all the requirements. Here are some basic steps that should help you start your corporation.
Choosing the name of the business
It is the first and important step when you are starting your business corporation. You also need to incorporate its designation which the name that identifies the business as limited and it can be used in abbreviated terms. Carefully check through the state list that contains restricted wording. Restricted words are words that are not allowed to be used to name a business. Some of the restricted words are mostly bank and insurance. Also, when selecting a business name for your corporation it should not contravene other trademarks.
Check the availability of the chosen name
When choosing a relevant and marketable name for your business you should ensure that the name is available in legal measures. Hence, it means that the chosen name should not be used officially by any other corporation within your state or country. To determine if the name is officially used by another corporation you should check with the country’s office which has those details.
In several instances, the new business name is usually registered after filling articles regarding the corporation. After selecting a name for your business and t is viable, consult with the country’s corporate office to find out if the name can be reserved till you get your articles ready for publishing and they are filed in the incorporation sector.
Register the DBA (doing business as) name
In case you have plans of operating the business under different names apart from the officially selected name you may be required to register the fictitious name as well. The laws that govern such situations are different at each county, country, and city level. Remember to check with the local authorities in the specific geographical location to get all the relevant details.
Appoint the business directors
Business owners primarily have to appoint their business directors and in most instances, they selected their family members or themselves as the business directors. Nevertheless, an owner has the capabilities of being the director but in normal cases, the director needs not be the owner. The director’s number that needs to be appointed entirely depends on the country’s regulations and requirements. There are states that require a certain number of directors to appoint others to have no restrictions.
Filing incorporation articles
Eventually, as a business owner, you are required to complete, find and have all the articles of the incorporation filed with the country’s state office secretary. The name of incorporation differs in several states for instance in some states it is referred to as the charter or certificate of incorporation. You can find the incorporation articles in the state secretary’s office.
Some states require the corporation director names to be in incorporation articles and the most likable thing is that you will designate registered agents.
Write all the corporate bylaws
The set bylaws are the stipulated rules which govern the operations of the corporation. The laws generally cover the stocks which a corporation is allowed to issue, the directors’ number, and procedures that relate to keeping records and meetings.
The state mostly does not require the laws to be filled with their office but they are an important aspect of running the business and you may require consulting a lawyer for relevant assistance when drafting all the appropriate laws to govern your corporation.
Drafting the shareholder’s agreements
It is usually optional and it is a document that is very important in the event the owner retires or dies or occurrence of events that need the owner to transfer his or her owned shares in the business. Having this type of agreement ensures that there is the protection of rights of the shareholders who remain behind after such events occur. To have a quality draft you may need to consult expert business lawyers to offer their diverse assistance.
Hold the first board of directors meeting
Regardless of the number of directors of the corporation, the first meeting is critical to deal with matters affecting the corporation functioning like the appointment of officers and issuing of stocks.
In conclusion, several procedures need to be followed systematically to form a successful corporation. Following holding the first meeting the other steps are:
- Issuing of stock
- Obtaining the relevant business permits and licenses
- Registering the state tax agencies
- Opening the corporate’s bank account
After following all these steps you are ready to begin your corporate journey!