The Basics of Forming a Corporation

If you are considering forming a corporation, it is wise to seek help from an experienced business attorney. The structure of your company will impact your business throughout its lifetime, so it is important to get it done right. Below are a few of the steps that must be taken when forming a corporation.


Select a Corporate Name

Each state has its own rules for naming a corporation, but a few general guidelines include:


  • The name of your entity cannot be the same as another entity on file with your state
  • The name must include the designation of “corporation, incorporated, limited, or one of the abbreviations for these words (corp., inc., or LTD.)
  • The name of your corporation cannot infer a link to the government or certain restricted business types (such as banks or charitable organizations without proper registration


It is important to research your proposed name and consider paying a small fee to reserve the name while you complete your filing. Additionally, you must ensure that your selected company name does not infringe on another party’s trademark.


Appointing Directors

Your corporation’s financial and policy decisions will be made by a board of directors. The directors are usually appointed by the initial owners or shareholders of the entity prior to the start of the business. It is important to note that owners can be directors, but directors are not required to be owners.


Filing Articles of Incorporation

Once you have chosen your entity’s legal name and appointed directors, you must file articles of incorporation (also commonly called the “certificate of incorporation”) to register your business. If you use any other tradenames in association with your corporation, you should file a tradename statement as well. If your company will be operating in other states, you will also need to register your company as a foreign entity and pay the necessary filing fees in those states.


A corporation should have bylaws that set forth the internal governing rules for the operation of the entity. It is important to work with a knowledgeable attorney to draft the bylaws.


Finally, if there is more than one shareholder, you should have a shareholder’s agreement. This contract will outline what will occur if an owner should die, become disabled or leaves the corporation, commonly known as a Buy-Sell Agreement.


Other Tasks

The above points are the initial steps that must be taken in forming a corporation. There are numerous other things that should be done including the first meeting of the directors to handle certain corporate formalities as well as making many important decisions regarding officers and finances. The corporation must issue its shares of stock, which divide the ownership interests from the entity. Again, it is wise to work with a corporate lawyer and to determine if you qualify for exemptions from securities registration requirements and to ensure that you are complying with the securities laws. You must also confirm that your corporation has obtained the necessary licenses and permits that are required to legally operate your business.


The above list is not exhaustive, so to learn more, contact us for an appointment. An experienced attorney at Nielsen Law Group is available to help with all your business matters. You can schedule your free initial consultation by calling (480) 888-7111 or submitting a web request here.