Start a Corporation

What does it mean to incorporate a business?

Incorporating a business is how a corporation is formed. As it relates to corporations, “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.

What steps go into starting a corporation?

Starting a corporation involves numerous important steps. We’ve broken down the essentials below:

• Name your corporation
  Before naming your corporation, 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.
• 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.
• Submit Articles of Incorporation
  For your corporation to become official, Articles of Incorporation must be filed with the state. Your articles must be accompanied by payment, as well, though states designate their own amounts. Skip ahead to the “Filing Articles of Incorporation” section to learn more.
• Draft corporate bylaws
  Corporate bylaws are the rules that set forth 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.
• 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 by state statute that an organizational meeting be held, so be sure to take meeting notes.
• Get an EIN
  EIN stands for Employer Identification Number. Often required before you can open a business bank account, EINs are issued directly from the IRS.
• Open and fund a bank account
  Mixing personal and business finances is an easy way to lose liability protection. You’ll want to open a business bank account to deposit money from shareholders, pay business bills, and more. Depending on your bank, you may need to provide your Articles of Incorporation, bylaws, and EIN in order to open a business account.

What information do I need to include in the 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 articles ask for.

• 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. Your registered agent can be you, another member of your corporation, or someone else entirely, as long as they have a physical address in the state where you conduct business. Or, you can hire a commercial registered agent instead.
• 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).
• 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 be required as well.

Where do I submit the Articles of Incorporation?

It depends on the state. Many states have you file with their Secretary of State’s office. Some states have designated a different filing location, such as Michigan’s Department of Licensing and Regulatory Affairs.

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 of Incorporation. Annual reports update or confirm business information, such as your registered agent’s address or other contact information.

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 by state. In Oregon, for example, domestic corporations will owe $100 each year while foreign corporations will owe $275. In New York, the annual report payment is just $9.

Do corporations pay taxes?

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