How to Form a Company

With our 5-step process, forming a company is simple. A company may be formed by submitting formation paperwork with your state and forming a board of directors.

Create a Corporation in 5 Simple Steps

A corporation is a legally distinct legal entity from its owners, known as shareholders, and governed by a board of directors.

By naming an initial director and completing formation paperwork with your state’s business division, you may establish a company for your small business.

In five simple steps, you may establish your own corporation:

Step 1: Give Your Company a Name
Step 2: Select a Registered Agent.

Step 3Hold an Organizational Meeting
4th: Submit the Formation Documents
Step 5: Obtain an EIN

Step 1: Give Your Company a Name

The first step in forming a company is to choose a business name. You must choose a distinct name that conforms with the corporate name regulations of your state.
1. Guidelines for General Corporate Names:

The words “corporation,” “business,” “incorporated,” “limited,” or an acronym of one of these keywords must appear in your name.
Your name must be distinct from any other businesses in your state. This often contains reserved names for states.
Without permission, you may not use the phrases “bank,” “trust,” “trustee,” “credit union,” or similar words in your name.
Your company’s name cannot include terms that may be confused with a government organisation (FBI, Treasury, State Department, etc.).

2. Is my business name available?

Your company’s name should be distinct and distinct from other business names.

3. Is the URL accessible?

Before you incorporate, check to see whether an appropriate URL for your selected company name is available. Even if you don’t intend to create a company website right immediately, we recommend purchasing a web domain right away to avoid other firms from acquiring it.

Step 2: Select a Registered Agent.

When you form your company with the state, you must designate a registered agent. Registered agents are also known as statutory agents, resident agents, or process servers in certain jurisdictions.

What exactly is a Registered Agent? A registered agent is a person or organisation chosen by an LLC or corporation to accept service of process, government communications, and compliance paperwork on behalf of a company.

Who Is Eligible to Be a Registered Agent? An person, a corporate organisation, or a professional registered agent service may serve as your registered agent. Any organisation or individual may act as your registered agent as long as they:

is at least 18 years old, has a physical location in the state where business is performed, and is accessible (in person) during regular business hours

Having someone else act as a registered agent for your LLC or business offers advantages.

Step 3 Hold an Organizational Meeting

Before filing the formation paperwork formally in Step 4, you must have an organisational meeting to perform the following tasks:

Complete and sign the articles of incorporation (see Step 4 below)
Establish and approve bylaws
Choose your first director (s)
Determine your ownership structure.
Fill out an Incorporator’s Statement.

Establish and Approve Corporate Bylaws

Bylaws are the rules that regulate and control how your organisation is governed and operated. Consider the bylaws to be your corporation’s constitution. It clarifies the norms and priorities for all parties involved.

The bylaws of a company will augment any regulations established by the federal government or the state.

Include the following in your bylaws:

The governance of the company, including the roles of directors and officials
Meeting processes, voting procedures, and the election of executives or directors
How will records be preserved and managed?
How will disagreements be resolved?
How will bylaws be added/modified in the future?
The annual shareholders’ meeting date
Contract Negotiation Techniques
Fiduciary responsibilities to the company (i.e. acting in the best interests of the corporation)
What is a quorum for voting purposes?

What exactly is a quorum? A quorum is the minimal number of members of an assembly that must be present at a meeting in order for the meeting or any votes taken within to be legitimate.

Appoint the First Directors

You must designate the minimum number of directors needed by the state until the first shareholders’ meeting.

A corporate director is in charge of operational bylaw adoption, modification, and repeal, as well as the election, monitoring, and removal of officers.

Following the incorporation of the company, the incorporator(s) — or initial director(s), if listed on the formation papers — shall convene an organisational meeting. During this inaugural meeting, either the incorporator(s) or the initial director(s) will elect the board of directors.
Selecting a Share Structure and Strategy

A share of stock is a corporation’s unit of ownership. Each share of stock reflects a proportion of the company’s ownership. If a business issues one share of stock, the shareholder (stock owner) owns 100% of the corporation.

Shares may be divided into classes. Each class, known as a share class, has unique rights and advantages. There may be several classes, and each class can have an unlimited number of shares.

Step 4: Submit the Formation Documents

Your state will need you to submit formation documentation.

You will have formally founded a company after the paperwork are authorised. Most states supply the formation paperwork online, while others need you to create your own.

The formation paperwork will address the fundamentals of your organisation, such as:

Name of the company and its primary address
Name and street address of the corporate service agent
The number of authorised shares that a company may issue.

Some states limit companies to include just one class of shares on their formation paperwork. You must either complete an extra provision or write your own formation paperwork in these circumstances.

Step 5: Obtain an EIN

What exactly is an EIN? The federal government uses an Employer Identification Number (EIN) or Federal Tax Identification Number (FTIN) to identify a company organisation. It is effectively the company’s social security number.

Why do I need an EIN? An EIN is necessary for the following activities:

To establish a commercial bank account for the firm
In terms of federal and state taxation
To recruit workers for the firm

How can I get an EIN? After founding the firm, the business owner obtains an EIN from the IRS (free of charge). This may be done online or in the mail.