What Are the Legal Requirements for Starting a Corporation?
Starting a corporation involves several legal steps and requirements to ensure that your business is properly established and complies with state and federal regulations. Below is an overview of the legal process for starting a corporation:
1. Choose a Name for Your Corporation
- Unique Name: Your corporation's name must be unique and distinguishable from any existing business entity registered in your state. You can check name availability through your state’s business name database.
- Compliance with State Laws: The name must comply with state naming requirements and cannot be misleading or use certain restricted terms (e.g., "bank" or "insurance" unless authorized).
- Incorporate with the Word "Corporation": The name must include a corporate identifier, such as "Corporation", "Incorporated", or abbreviations like "Inc." or "Corp."
2. Choose a State of Incorporation
- State Jurisdiction: You must choose the state in which you want to incorporate. Most businesses incorporate in the state where they are primarily located, but some may choose states with more favorable tax laws or business regulations, such as Delaware.
- Registering in Multiple States: If your business will operate in multiple states, you may need to register as a foreign corporation in those states in addition to incorporating in the state of origin.
3. Prepare and File Articles of Incorporation
- Articles of Incorporation (Certificate of Incorporation): This is the primary document required to legally create a corporation. It typically includes:
- Corporation Name
- Corporation’s Purpose: Some states may require a brief description of the corporation's purpose (e.g., "to operate a business of selling goods").
- Registered Agent: The name and address of the person or entity designated to receive legal notices on behalf of the corporation.
- Incorporators: The names and addresses of the individuals responsible for filing the articles of incorporation.
- Stock Information: If the corporation issues stock, the number of shares it is authorized to issue must be specified.
- Filing Fees: Filing articles of incorporation typically involves a filing fee, which can range from \$50 to several hundred dollars depending on the state.
4. Create Corporate Bylaws
- Corporate Bylaws: Although not always required to be filed with the state, corporate bylaws are essential internal documents that outline how your corporation will be governed. Bylaws typically include rules regarding:
- Board of Directors: How the board is elected, its duties, and the number of directors.
- Shareholder Meetings: Procedures for calling and conducting meetings, including voting rights.
- Officers: Titles and duties of corporate officers (e.g., CEO, CFO).
- Stock Issuance: Guidelines for issuing and transferring stock.
Bylaws are crucial for preventing internal disputes and ensuring smooth governance, but they are typically not filed with the state.
5. Appoint Directors and Hold Initial Meeting
- Appoint Directors: The incorporators (individuals who filed the articles of incorporation) must appoint the initial board of directors. The number of directors is typically outlined in the bylaws.
- Initial Organizational Meeting: The board of directors holds an initial meeting to adopt the bylaws, issue stock, and make other organizational decisions. Minutes from this meeting should be recorded and retained for corporate records.
6. Apply for an Employer Identification Number (EIN)
- EIN: An Employer Identification Number (also known as a Federal Tax Identification Number) is required for tax purposes, opening a business bank account, and hiring employees. You can apply for an EIN through the Internal Revenue Service (IRS), either online or by submitting IRS Form SS-4.
- No Fees: The application for an EIN is free, and the IRS typically issues it immediately if done online.
7. Comply with State and Local Licensing and Tax Requirements
- State Tax ID Number: Some states require businesses to apply for a State Tax ID Number or Sales Tax Permit to collect state sales taxes or to file corporate income taxes.
- Business Licenses and Permits: Depending on the type of business, you may need to obtain specific licenses or permits (local, state, or federal), such as a business license, health permits, or building permits.
- State Tax Registration: Some states require corporations to register for state taxes, including sales tax, employment taxes, or income taxes.
8. Set Up a Corporate Bank Account
- Open a Bank Account: To separate your personal and business finances, you must open a corporate bank account. This requires your EIN, articles of incorporation, and bylaws.
- Initial Capital: Some states or banks may require a minimum amount of initial capital to fund the corporation’s bank account.
9. Issue Stock
- Stock Issuance: If your corporation is issuing stock, you must issue stock certificates to the shareholders, indicating their ownership of the company. The number of shares issued must be recorded in the corporation’s stock ledger.
10. File Annual Reports and Maintain Compliance
- Annual Reports: Many states require corporations to file an annual report (or biennial, depending on the state) to keep their information up to date. This may include the names of directors, officers, and the corporation's physical address.
- Ongoing Compliance: Corporations must continue to comply with state regulations, including maintaining corporate records, holding annual meetings, and submitting filings as required by law.
What to Do If You Are Falsely Accused of a Crime (Theft or Harassment) During Incorporation or Business Operations?
If you are wrongfully accused of a crime during or after the process of starting a corporation (for example, theft or harassment related to your business), you must take immediate action to protect yourself and your business. Here are the key steps to follow:
1. Seek Legal Representation
- Consult a Lawyer: Contact a criminal defense attorney immediately if you are accused of a crime. They will help protect your rights, guide you through the legal process, and provide advice on the best course of action.
- Business Attorney: If the accusation is related to your business activities, it may also be wise to consult with a business lawyer to ensure the corporation is protected.
2. Gather Evidence
- Documentation: Collect any documentation or evidence that disproves the accusation, such as emails, contracts, or communications that show you were not involved in criminal activity.
- Witnesses: If applicable, gather statements from witnesses who can corroborate your version of events.
- Alibi: If the accusation involves a specific event or time, provide an alibi or other evidence showing you were not present.
3. Do Not Engage in Defamation
- Public Statements: Avoid making public statements about the accusation that could be interpreted as defamation or an attempt to damage the accuser’s reputation. Let your attorney handle all communications with law enforcement or the media.
4. Challenge the Evidence
- Lack of Evidence: If the prosecution cannot provide sufficient evidence to support the accusation, your attorney can challenge it in court, potentially leading to a dismissal of charges.
- False Allegations: If the accusation is a false allegation, your lawyer will work to expose the motives behind it, such as personal revenge or business competition.
