A corporation is a legal entity that is separate from its owners, which can protect you from any business liabilities and help get your business off the ground.
Whether it’s to save money on taxes, attract investors, protect yourself, or boost reputability, starting a corporation might be the best next step for you and the business.
In this piece, we’ll walk you step by step through the incorporation process, review state-specific requirements, and answer some common questions you may have along the way.
1. Choose a Business Name
An important first step when starting a corporation is selecting a business name. In most states, you’ll need to include a corporate designation or a word that identifies your business as a corporation.
Examples of corporate designations include:
- Incorporated (Inc.)
- Corporation (Co.)
When choosing a corporate name, you should also be sure that your name of choice doesn’t infringe on any existing trademarks. A trademark search can help you ensure that your name is available to use.
It’s also a good idea to check your state’s list of restricted words. This list includes words that are off-limits for use in your business name. Examples include “bank” and “insurance.”
Certain words are prohibited unless you are legally allowed to run your business as such by the respective government agency. To ensure that your name is legally available, check with your state’s Secretary of State office.
2. Register a DBA
If you want to do business under a name that is different from the corporate name you’ve chosen, you may need to register a fictitious name. This allows you to keep the identity of your corporation separate from your business name.
A fictitious name may also be known as:
- Doing business as (DBA)
- Assumed name
- Trade name
Depending on where you’re located, the laws surrounding DBA names can vary. Be sure to check with your state’s Secretary of State office to ensure your DBA name meets all legal guidelines.
3. Appoint Directors
When forming a corporation, the owners will often appoint directors. The owners can appoint themselves and/or others to be directors.
A director’s responsibilities include:
- Governing the corporation
- Managing the corporation’s business and affairs
- Electing corporate officers
- Attending corporate meetings
The number of directors needed will depend on the laws and guidelines of your state and could also depend on the number of owners your corporation has.
4. File Your Articles of Incorporation
Next, you’ll need to complete and file articles of incorporation with your state’s Secretary of State office. By doing so, you will establish your corporation as its own business entity.
Articles of incorporation typically include the:
- Name and address of the corporation
- Purpose of the corporation
- Name and address of the registered agent
- Type and number of shares of stock to be issued
The registered agent is the contact person listed for your corporation. They will receive service of process notices, government correspondence, and compliance-related documents on behalf of your corporation.
Depending on your state, articles of incorporation may be called the certificate of formation or certificate of incorporation.
5. Write Your Corporate Bylaws
Another important step is writing corporate bylaws. Bylaws are written rules that determine how your corporation will be governed.
Corporate bylaws typically cover things like:
- How many shares of stock your corporation can issue
- How many directors are required
- Meeting and record-keeping procedures
Although these bylaws are not required to be filed with the state, it is an important part of the incorporation process. It can be helpful to reach out for legal assistance when writing corporate bylaws to make sure nothing slips through the cracks.
