Corporation Setup Process
Setting up a corporation involves several key steps. The exact process can vary based on the country or state/province you’re in, but here are the general steps to establish a corporation.
1. Choose a Business Name
Select a unique name for your corporation that complies with your state or country’s naming rules. It should be distinguishable from other registered businesses.
Check the availability of the name through a search tool provided by your local government agency (e.g., Secretary of State or corporate registry).
Consider securing a matching domain name if you plan to have an online presence.
2. Decide on the corporation type.
Determine the type of corporation you want to form. Common types include:
C Corporation (C Corp): The most common type in the U.S., which is taxed separately from its owners.
S Corporation (S Corp): Offers pass-through taxation, meaning profits and losses pass through to the individual tax returns of the shareholders.
Non-profit Corporation: Designed for organizations that aim to operate for charitable purposes rather than profit.
Limited Liability Company (LLC): Although not technically a corporation, it offers limited liability protection and flexible tax options.
3. Choose a State or Country for Incorporation
For U.S. businesses, this means deciding in which state to incorporate. Popular choices include Delaware and Nevada due to favorable business laws.
In other countries, research the regulations and tax advantages of incorporating there.
4. Prepare and File Articles of Incorporation
These are the official documents that legally establish your corporation. Commonly called the Certificate of Incorporation or Charter, they typically include:
- Business name
- Purpose of the corporation
- Address of the registered office
- Number and type of shares to be issued
- Incorporators’ details (those who set up the corporation)
File these with the relevant state or national authority, and pay the associated fees.
5. Appoint Directors and Officers
Corporations are required to have a board of directors. These individuals oversee corporate affairs and make high-level decisions.
Officers (e.g., CEO, CFO) are responsible for daily management.
Your Articles of Incorporation may require you to list the initial directors, or they may be appointed afterward during the first board meeting.