How to Form a Corporation Step-By-Step

What does it mean to incorporate a business?

Incorporation is how a corporation is formed. “Incorporate” is simply a fancy way of saying “form” or “start.”

Incorporation occurs after your Articles of Incorporation are filed with the state in which you conduct business.

Step-By-Step Instructions

The incorporation process varies by state, and you may need to account for steps we’ve not outlined here. For example, Arizona requires publishing a notice about your business’s formation in your county’s paper. (The specific process varies by county.)

In general, starting a corporation means doing the following:

1. Name Your Corporation

Before naming your business, you need to make sure the name you want is available. All states have a database you can search to find out if your desired name is already in use. In addition, you may want to conduct a trademark search to ensure the name isn’t being used elsewhere by a business in your industry.

2. Appoint a Registered Agent

A registered agent is a person or entity who accepts official documents and service of process on behalf of your business. Most states require corporations to appoint and maintain a registered agent. Sometimes called resident agents, statutory agents, or agents for service of process, registered agents must be available during business hours at the physical address listed in your Articles.

3. Submit Articles of Incorporation

To register your corporation, you’ll file Articles of Incorporation with the state. Articles must be accompanied by payment, as well, though states designate their own amounts.

4. Draft Corporate Bylaws

Corporate bylaws are the rules that determine how a corporation operates. While they rarely need to be filed with the state, bylaws are commonly required by state law and help corporations achieve smooth business operations.

5. Hold an Organizational Meeting

An organizational meeting is the first meeting your corporation holds. It’s where bylaws are adopted, officers are appointed, and shares of stock are issued. Many states require this meeting, so be sure to take notes so that the meeting is documented.

6. Get an EIN

EIN stands for Employer Identification Number. Often required before you can open a business bank account or hire employees, EINs are issued by the IRS.

7. Open and Fund a Bank Account

Your corporation needs a business bank account. Not only is it legally required, it’ll help you keep funds organized, deposit money from shareholders, and pay business bills. Depending on your bank, you may need to provide your Articles of Incorporation, bylaws, and EIN in order to open a business account.

What to include in Articles of Incorporation

Each state has their own rules regarding what information needs to be included in Articles of Incorporation. Below, we’ve outlined some of the most common pieces of information you’ll need to provide.

• Incorporator
  The incorporator is whoever signs and submits the Articles of Incorporation. This might be a shareholder. Or, if you hire a business or attorney to submit your articles, they’ll sign instead. Incorporator contact information may also be required.
• Business Name
  You’ll usually need to include the word “Incorporate” or “Corporation” or an abbreviation like “Inc” or “Corp.”
• Duration
  Most corporations don’t have a set end-date, but if you want yours to, you’ll list that here.
• Effective Date
  The effective date determines when your business will be officially incorporated with the state. Most corporations are formed ASAP, but if you want to set a specific effective date (usually up to 90 days in the future), you can indicate that here.
• Registered Agent Name and Contact
  In states where a registered agent is required, you’ll need to list them in your Articles of Incorporation along with contact info, including a physical address in the state. Your registered agent can be you, another individual, or a commercial registered agent.
• Authorized Shares
  How many shares is your business divided into? You’ll list that here. For stock corporations, you’ll typically need to authorize at least one share. Some states may require additional information, such as share classes (if you have multiple).

Where do I submit Articles of Incorporation?

Many states process business registrations at their Secretary of State’s office. Some states have designated a different filing location, such as Utah’s Division of Corporations & Commercial Code.

How much is it to file?

The Articles of Incorporation fee tends to hover around $100, though it varies by state.

In Utah, for example, Articles are $54 to file. In Arizona, it’s $60 for a paper filing or $95 to file online (which automatically expedites the process).

What is an annual report?

An annual report is an informational document you file with the state, usually submitted to the same office where your sent your Articles. Annual reports update or confirm business information, such as contact info and your registered agent’s address.

Nearly all states require corporations to submit some form of regular state report, though they may come in the form of annual, biennial, periodic, or decennial reports. Reporting requirements vary widely—some forms can be easily completed in minutes while states like Alabama and Arkansas combine their reports with state tax forms.

Along with your report, payment will be due. Amounts vary. In Oregon, for example, domestic corporations owe $100 each year while foreign corporations owe $275. In Utah, the annual report payment is just $18.

Do corporations pay taxes?

Corporations must pay federal income tax, and in many states, a state-imposed income tax as well. Corporations may also be subject to sales tax, property tax, employment tax, and other state and local taxes.

Taxed as C-corps by default, corporations are subject to double taxation. This means income taxes are paid at the corporate level, then any shareholder dividends are taxed again at the individual level.

Tax obligations for corporations can get complicated fast. You’ll likely want to speak with a tax professional when setting up your business.