An S Corporation offers shareholders limited liability by protecting shareholders’ personal assets from any business claims. Most states require that out-of-state corporations pay a filing fee in order to register as a foreign corporation. Many states require corporations to file an annual report and/or other annual corporation paperwork, but requirements can vary. The forms you need to start a corporation depend on the state where you are incorporating, but they will at least include a formation document. The name of this document varies from state to state (e.g., articles of incorporation, certificate of formation, certificate of incorporation, etc.). We recommend starting with a high number of authorized shares. Many attorneys and business professionals suggest 10 million.

Shareholders can also receive tax-free dividends if certain regulations are met. C corporations have the advantage of allowing profits to remain with the corporation and paying them out as dividends to shareholders. Also, for businesses that eventually seek to issue stock, a C corporation can easily issue shares to raise capital for further expansion of the business. Both the corporation and the limited liability company offer similar legal advantages and protections to their owners.

For over 32 years, Puget Law has provided exemplary legal services in the areas of estate planning , probate, small business, and real estate. A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time. A corporation or its agent shall maintain a record of its shareholders. To elect S-Corporation status a corporation must meet all the requirements of an S-Corporation and must submit IRS Form 2553.

Foreign entities must follow a different procedure to do business in Georgia. On approving the articles, the state office (frequently the secretary of state’s office) grants the charter and creates the corporation. The election must be made within two and one-half months of incorporation to be effective immediately.

Incorporation And Legal Structures

A for-profit corporation elects to be taxed as an “S” corporation by filing an election with the Internal Revenue Service. Please contact the IRS or competent tax counsel regarding the decision to be taxed as an “S” corporation and the requirements for filing the election. This is not a matter with which the Secretary of State may assist.

• During this initial meeting, the incorporators will name all of the initial directors.
• For many businesses, the best option is to file as a corporation.
• Using an online filing service can also expedite the incorporation process.
• You also may need to issue stock or file an Annual Report, which is a requirement in most states.

The laws of each state view a corporation organized in that state as a domestic corporation and a corporation organized in any other state as a foreign corporation. Corporations conducting interstate business usually incorporate in the state that has laws most advantageous to the corporation being formed. The articles of incorporation must be filed with the Secretary of State along with the applicable filing fees. Unless a delayed effective date is specified, corporate existence begins when its certificate of formation is filed by the Secretary of State. A delayed effective date for a certificate of formation may be no later than 90 days after the date it is filed. Owners of C Corps pay taxes on profits paid , then everything else is filed under the corporate tax rate. Because of this, corporations are said to be “double taxed.” First when the company makes a profit, and again when dividends are paid to shareholders.

Things To Ask Yourself Before Forming A Corporation

Depending on the state in which you live, you may or may not have to take all the steps outlined below to start a corporation. To obtain state-specific information on how to start a business or form a corporation, check out the list of links to state business offices maintained at the Small Business Administration website. S corporations – These corporations are popular because corporate taxes are handled on the owners’ personal tax returns. A registered agent is the contact person for your company who will receive government notices and compliance-related documents. Each state has a corporation act that permits the formation of corporations by qualified persons. Incorporators are persons seeking to bring a corporation into existence. Most state corporation laws require a minimum of three incorporators, each of whom must be of legal age, and a majority of whom must be citizens of the United States.

It is used to establish your corporation as a C corp or an S corp. Before you file the Articles of Incorporation, you’ll need to choose a corporate name and registered agent. A limited liability company is a corporate structure that protects its investors from personal responsibility for its debts or liabilities. Creating an LLC is a much simpler process than creating a corporation and generally takes less paperwork. LLCs are under the jurisdiction of state law, so the process of forming an LLC depends on the state in which it is being filed. Most states require filing articles of organization with the Secretary of State and some states allow for them to be filled out online.

Depending on your bylaw structure, either a majority vote or minimum vote will be required to pass the amendment. After you’ve chosen a name for your business and appointed your directors, you must prepare and file “articles of incorporation” with your state’s corporate filing office.

How To Form A Corporation In All 50 States Start Your Company

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You can start a corporation by filing formation documents with your state and setting up a board of directors. A registered agent is a person who is assigned to accept official mail and service of process in case of a lawsuit. This role must have a physical address in the state of incorporation, and also be available during business hours.

Hold Your First Board Of Directors Meeting

Almost all large businesses are corporations, including Microsoft Corp., the Coca-Cola Co., and Toyota Motor Corp. Some corporations do business under their names and also under separate business names, such as Alphabet Inc., which famously does business as Google.

• The reason it is necessary to enforce the notion that the corporation is a separate legal entity is to protect the limited liability of the shareholders.
• For example, restaurants likely need health permits, building permits, signage permits, etc.
• The software will search the business registry in the state you choose to verify the name’s availability.
• If you are a C corporation, use the information in the chart below to help you determine some of the forms you may be required to file.
• If you’re working with a lawyer, they should have firm advice.
• Both types of entities have the significant legal advantage of helping to protect assets from creditors and providing an extra layer of protection against legal liability.

ZenBusiness receives spectacular feedback from its clients, with 6,200+ reviews available online and nearly all of them being positive. Finally, the company also displays tremendous corporate responsibility, as it loans money to women- and minority-owned businesses and partners with Kiva.org to help lift people out of poverty. Before you decide on a corporation, you should ensure that you’re both aware of and okay with the negatives that accompany this entity type. Finally, if you intend to make shares of your corporation available to the general public, then you must form a corporation to do so. As we’ve already mentioned, corporations are the only entity with this privilege. One of the most important decisions you’ll make about your business is which entity type to form, but choosing the right one can be tricky.

Who Are The Members Of A Corporation?

The bylaws are a set of rules or regulations adopted by the board of directors of a corporation to govern the conduct of corporate affairs. The bylaws must be in agreement with the laws of the state and the policies and purposes in the corporate charter.

Bylaws are the rules and internal regulations under which the corporation will operate . Additionally, banks and creditors may ask to see your corporate bylaws to establish the legitimacy of the corporation before extending loans or allowing your corporation to open accounts. Some states allow a type of corporation called a close corporation, which may appeal to small business owners. A close corporation is one that is managed by its shareholders.

• There are many other aspects of professional corporations that should be addressed before you venture into this form of entity.
• We reviewed the top business incorporation services and LLC formation services to see which has the best overall value.
• You may want to consult with an experienced business attorney to assist you in the drafting of the shareholders’ agreement.
• Alternatively, you could always register a generic corporate name right now and then use Incfile down the road to register a DBA or FBN .
• On-line filing system for business owners and 3rd party non-service company…
• When you form a corporation, you must take many essential steps to form a corporation properly.

The buyout provisions can be included in the shareholder agreement. Your corporate name can play an important role in the marketing of your goods and services, so you should choose your business name carefully. Deciding which is better, a corporation or an LLC, depends on your business’ specific situation. Your company’s size, structure, goals, and more will determine if it is better to form a corporation or form an LLC. You should carefully consider your business structure, goals, and financial situation before selecting your corporate structure. Your company profits have reached a point where it makes financial sense to leverage corporate tax benefits. Meeting minutes are not legally required in some states but they are necessary.

The next step is to apply for all necessary licenses and permits from both federal and state agencies. Requirements and fees will vary based on location, business activities, and local government rules.

Customer Service

A corporation with two or more shareholders may require the efforts of all of the shareholders to succeed, especially in the early life of the business. If one shareholder withdraws or dies, the existence of the corporation may be threatened.

They can be registered with the state, county, or city in which your city is located. A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation. If you’re looking into forming a corporation, here are the steps involved.

We are not a law firm, or a substitute for an attorney or law firm. Use of our products and services are governed by ourTerms of Use andPrivacy Policy. Business names often have abbreviations after them, including LLC and Inc. Find out what these Forming a Corporation abbreviations mean and how an LLC is different from a corporation. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

This is an easy way to differentiate your company from the legal business name filed with your secretary of state’s office. The step-by-step process below will show you how to form a https://www.bookstime.com/ corporation using Incfile. Most states also require an annual filing fee, along with an annual report. This is another cost that varies depending on the location of your corporation.

Corporations should have a shareholder agreement because it can ensure a secure corporation. Without a shareholder agreement, you could run into trouble if the business venture doesn’t go as planned or shareholders are caught up in personal issues. Even though not legally required in every state, they are very beneficial to companies. They are beneficial because they set the guidelines and processes that the owners and board will use to run the business. Hiring a registered agent service can help corporations manage paperwork, have a physical address, and operate without any privacy concerns. By choosing a registered agent service, you can have someone else handle the annual paperwork for a relatively small fee. In addition, outsourcing the registered agent role can be a great option for small, web-based corporations that do not have a physical location.

Cons Of Forming A Corporation

The other aspect of the stocks you issue is the dollar value of each share you issue, known as par value. In the above example, if 4,000 shares are issued at $2 par value, each stakeholder pays the company $2,000 for a total of $8,000 starting cash in the company’s account. The company can then use these funds to operate the business. Again, the most critical step is to record the minutes of this meeting and put them in that record book from step six.

It is important as a business owner to understand the general costs of incorporating before beginning the process. Self-employment taxes can take a big bite out of your income—but you can take steps to minimize the impact. LLCs and S corporations are different aspects of business operations, but are not mutually exclusive. Use this guide to learn more about the difference between an LLC vs. an S corporation. It is important to note that registering with the Georgia Secretary of State is not the only step you will need to takebefore you can start doing business in the State of Georgia. Limitations on authority of the management and owners of the corporation.