Corporation

5 Primary requirements for forming a Corporation

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If business owners turn a innovative concept into a marketable product or service, they are ready to start the process of corporate creation.

There are many conditions to satisfy as a business owner before you can start the process.

Ensure you have all the documents and materials required to help you integrate your business.

The establishment of a corporation provides legal protection for owners when done effectively, and can even save you money.

Continue reading this post if you are interested in the main requirements for the corporation formation process.

1. An unused Business name

You must select an appropriate business name to start the incorporation process.

You will often have to include some form of corporate designation inside your chosen business name.

For example, to end your business name by adding ‘Limited, Incorporated, or Corporation.’ In addition, you should consult your list of restricted words on specific states.

Some states protect themselves to particular terms that can be used in company names.

Commonly, states prohibit enterprise start-ups from using words like ‘Bank or Insurance.’

In order to form a corporation successfully, you must choose a business name that is available.

2. Articles of Incorporation

To incorporate your company you need to have a written copy of your articles of incorporation.

Some states have more stringent Articles context requirements than others.

Most states however require you to detail your business specifics within the articles.

For example, your company name, different addresses, or the volume and class of stock you plan to issue.

Find the best states before submitting those papers to integrate a company in.

These articles must be prepared, signed by the incorporator, then filed with the secretary of state of your state.

You need to produce your articles of incorporation to form a corporation.

3. Corporate bylaws

To form a corporation you’re required to have corporate bylaws. Also, some jurisdictions have more strict bylaw laws than others do.

Many states do not even allow businesses to present bylaws at all.

Corporate bylaws should outline the duties of shareholders, as well as the duties of officers and directors.

They should also contain a general description of how your business ultimately operates.

To shape the company build concise corporate bylaws.

4. Registered EIN

To incorporate your company you must obtain an Employer Identification Number, or EIN, from the IRS.

An EIN is the company equivalent of an individual Social Security Number.

If you wish to open a bank account for your corporation or file taxes, an EIN is required.

While applying for an Employer Identification Number, you’ll be asked some questions about your tax exemptions and consequences.

Because of that, consulting an attorney before submitting any finalized paperwork is often helpful. To integrate your small company, register for and get an EIN.

5. Comprehensive Shareholders’ Agreement

Create and record a clearly established agreement with the shareholders for the incorporation process.

Agreements of shareholders are not needed but they dramatically improve organization and delegate responsibilities for your company.

Such deals also reflect the process of becoming a shareholder.

At the same time, they list hoe existing shareholders being able to sell their shares to exit the corporation.

These agreements have been drafted in many cases to restrict who can come to be a shareholder in a newly formed corporation.

You need a clearly defined agreement of the shareholders to create a company.

In Summary

To small business owners, incorporating can be a big move. If you’re interested in how to set up a corporation, there are several steps you must follow.

Given its significance, strict adherence to the corporate creation process is essential.

You are required to choose a company name available for the process.

You need well-defined incorporation articles too. Develop corporate bylaws to allow for acceptance throughout the process.

A registered EIN with the IRS is also required. You will need to come up with a clearly defined shareholder agreement.

If you are interested in incorporating, consider the major requirements for the aforementioned corporate formation process.

Komolafe Timileyin is a passionate entrepreneur that loves to solve entrepreneurial issues. He is also a blogger and an upcoming Engineer.

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