How to Form a Small Corporation
A corporation is a business that is considered a legal entity separate from the owners' personal holdings. Owners are shareholders of the corporation. Shares are issued to shareholders when the corporation is formed, and any time throughout the life of the corporation. Determine the structure of the corporation. Two main corporation structures are the S corporation and the C corporation. Each structure has different tax advantages.
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Instructions
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Getting Started
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Choose a name. Form a corporation including one the following words with your business name--Corporation, Company, Incorporated or an abbreviation of one. One of these must be included in your business name. If you are forming a professional corporation such as an attorney's office, then the words Professional Corporation, P.C. or Prof. Corp. must be used.
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Choose a tax structure. Form an S corporation, which allows any corporate earnings to be treated as distributions and passed to the owner's individual tax return. Form a normal C corporation, and the profit of the corporation is double-taxed, when the corporation earns the profit and when the shareholders' dividends are distributed. One benefit of a C corporation is that you can have more deductions, such as charitable contributions. A C corporation also can have unlimited shareholders, while an S corporation is limited to 100.
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Decide which state. Check to make sure your name is available. Visit the corporation division or secretary of state of the state in which you are filing. Your name must not match any other active corporation's name in that state.
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Decide who is going to be included in the board of directors. Having a board of directors is required when forming a corporation, although many states allow only one board member. Board members report to the shareholders and are also responsible for carrying out the corporation's mission and visions.
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File for a TIN (tax identification number). All corporations must apply for a TIN, also known as an employer identification number (EIN). This is a nine-digit number assigned to businesses to identify tax accounts. The easiest way to apply for an TIN number is online at irs.gov.
Prepare and File Documents
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Adopt bylaws. The board of directors generally holds a meeting to adopt bylaws and elect officers within the corporation. The officers consist of a president, vice president, treasurer and secretary. One person can fill multiple roles and also can be a shareholder of the corporation.
The bylaws address any rules, regulations and provisions that manage the corporation. The bylaws must be consistent with the corporation's articles of incorporation.
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Prepare articles of incorporation. The state in which you are registering has a standard form for preparing articles of incorporation. Use this form when registering your business. Visit your state's corporation division or secretary of state for the form. Prepare to submit the name of your corporation, the registered agent's name and address (person who accepts legal service for the corporation), corporate mailing address and the number of shares with value the corporation is authorized to issue, the purpose of your corporation, incorporator and, depending of the state, the names and addresses of the board of directors.
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File. Visit the state's website in which you wish to incorporate and obtain instructions for filing your corporation. Many states allow you to file online or via fax, regular mail or in-person. Each state has a filing fee, generally between $50 to $100. Many states allow you to remit payment by credit card. There is usually a $5 fee for a confirmation copy, once your corporation is filed.
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