A corporation offers the limited liability of shareholders. It has well-established legal precedents. You can also easily transfer corporate shares from one shareholder to another. Because of how it works, large companies and investors choose to form a corporation.
How to Form a Corporation in 2023?
It is important to remember that if you seek to incorporate, you and the shareholders are responsible for the debts of your corporation. However, your corporation can still be sued. If you have decided to incorporate your business, here are the things to follow.
Choose a State for Incorporation
This is the initial step if you wish to incorporate your business. Entrepreneurs choose to incorporate it in their home state. However, some pick to incorporate in a state with more favorable laws or tax rates. Delaware is a popular destination for many businesses because of its business-friendly laws and established legal system.
Pick a Name for Your Corporation
Once you have chosen a state to incorporate in, you will need to choose a name for your corporation. It must be unique and not already in use by another business. You may ask the state where you wish to register your corporation as to how you can access the database of registered business names. Once you know this detail, you can now start searching to see if your preferred name is available.
File Articles of Incorporation
The next step is to file articles of incorporation with the state. This document outlines the basic details of your corporation, such as its name, location, and purpose. You also need to include the names and addresses of your initial board of directors.
Draft Corporate Bylaws
Corporate bylaws are the rules and procedures that govern your corporation. The outline of how the corporation will be run, including how the meeting will be conducted and how decisions will be made. These bylaws must be approved by your board of directors.
Hold an Organizational Meeting
Once the bylaws are in place, you will need to hold an organizational meeting with your board of directors. This meeting is where you will elect officers, adopt bylaws, and complete any other necessary paperwork.
Obtain Necessary Business Licenses and Permits
Depending on the location and your industry, you may need to obtain additional business licenses and permits. You should obtain these documents before you can legally operate your corporation. Check with your state and local government to know the licenses and permits you need for this purpose.
Obtain an Employer Identification Number (EIN)
This is a unique number assigned by the IRS. This will identify your corporation for tax purposes. You will need to obtain an EIN before you can open a business bank account, file taxes or hire employees.
Register for State Taxes
You need to register for state taxes. Check with your state government to know what taxes you will need to register for and how to do so.
Make It Easier to Apply
To form a corporation in the US, you need to follow a multi-step process. However, if you want the quicker way, you may consult with our experts at Corporation Center to help you out.