Forming A Corporation, The Essential Principles

The process of forming a corporation may seem like a scary idea but it does not have to be. If this is something you would like to do you can employ the services of specialists or read all about the process and carry out the tasks yourself.

The first thing you need to do when forming a corporation is to pick the company name. You can find out what is off limits by searching the internet and contacting your local corporate office. One stipulation is that the name must end with a word like “Incorporated” or “Limited”. Once a name is chosen you are ready to move forward.

The next step involves electing members to oversee the company such as a director, chairman and members of the board. The amount of people you need may vary so you will need to confirm this with the corporate office again. The people who will take on these roles must be elected before you can even begin to fill in any papers.

Blank forms can then be obtained from the corporation filing office. They will require details such as the name of your company, the director’s name, board member’s names and the address of your company. You may also be asked to appoint a registered agent and provide their details. This person has the responsibility of being the points of contact for the public should any legal matters arise.

Next in the forming a corporation process, is the formation of corporate bylaws. This document outlines the rules that will ensure the smooth running of the business and details items such as planned annual shareholder’s meetings. This is usually followed by a board meeting where board members and the director finalize any outstanding issues.

This then leaves the final stages of forming a corporation which are the issuing the stocks of shares and obtaining an EIN (Employee Identification Number). Once this is complete you are more or less ready to start trading as a corporation.

There is a way to avoid this process which is by way of buying ready made companies. There are organizations that prepare and register corporations, which simply means you then have to buy them. Ready made companies will be priced differently, generally depending on the name of the business and how long it has been running.

Forming a corporation can be worth the hassle as you can take advantage of lower tax rates and limited liability. This means that creditors cannot chase shareholders for debts owed by the company. As long as you abide by the laws governing incorporation, you will be covered for most eventualities.