BUILDING A CORPORATION
A corporation is a legal entity created under state laws to transact business that is given the same legal rights as people, but possesses privileges and liabilities distinct from the shareholders who compose it. Corporations can operate a business, open bank accounts, enter into contracts, and buy property. You can either choose to fill out and file the requisite legal paperwork yourself or use a professional service.
Choosing a Corporate Name
The name of your corporation must comply with the rules of your state’s corporation division. You should contact your state’s office for specific rules, but the following guidelines generally apply: The name cannot be the ...view middle of the document...
For example, the directors authorize the issuance of stock, appoint the corporate officers and set their salaries, and approve loans to and from the corporation. Directors are typically appointed by the initial owners (shareholders) of the corporation before business begins. Often, the owners simply appoint themselves to be the directors, but directors do not have to be owners. Most states specifically permit a corporation to have just one director, regardless of the number of owners. In other states, a corporation must have at least three directors, except that a corporation with only one owner can have just one director, and a corporation with only two owners can have two directors.
Filing Articles of Incorporation
After you’ve chosen a name for your business and appointed your directors, you must prepare and file “articles of incorporation” with your state’s corporate filing office. Typically, this is the Department or Secretary of State’s office, located in your state’s capital city. While most states use the term “articles of incorporation” to refer to the basic document creating the corporation, some states (including Connecticut, Delaware, New York and Oklahoma) use the term “certificate of incorporation.” Washington calls the document a “certificate of formation,” and Tennessee calls it a “charter.” No state requires a corporation to have more than one owner. For single-owner corporations, the sole owner simply prepares, signs and files the articles of incorporation himself. For co-owned corporations, generally all of the owners may sign the articles, or they can appoint just one person to sign them. Whoever signs the articles is called the “incorporator” or “promoter.” Articles of incorporation don’t have to be lengthy or complex. In fact, you can usually prepare articles of incorporation in just a few minutes by filling out a form provided by your state’s corporate filing office. Typically, the articles of incorporation must specify just a few basic details about your corporation, such as its name, principal office address and sometimes the names of its directors. You will probably also have to list the name and address of one person — usually one of your directors — who will act as your corporation’s “registered agent” or “agent for service of process.” This person is on file so that members of the public know how to contact the corporation — for example, if they want to sue or otherwise involve the corporation in a lawsuit. Generally, all of the LLC owners may prepare and sign the articles, or they can appoint just one person to sign and file the articles.
Drafting Corporate by Laws
Bylaws are the internal rules that govern the day-to-day operations of a corporation, such as when and where the corporation will hold directors’ and shareholders’ meetings and what the shareholders’ and directors’ voting requirements are. To create bylaws, you can either follow the instructions in a self-help resource or hire a lawyer...