Forming a Corporation

Here are the general steps you need to follow in order to form an corporation (specifically, a C corporation) in compliance with applicable laws. Make sure to consult your state page for state-specific details.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

As a general matter, the name must (a) contain the words "Corporation," "Incorporated," "Limited," or an abbreviation of one of these words ("Corp.", "Inc.", or "Ltd."); (b) not be the same as that of another corporation on file with the state; and (c) not contain words that suggest an association with the federal government or a restricted type of business, such as "Bank," "Cooperative," "Federal," "National," "United States," or "Reserve."

Although you are not required to do so, you should consider registering your business name as a federal and/or state trademark. Please see the Trademark for Business Naming section for details.

2. Recruit and/or appoint a director or directors for the corporation.

A corporation's board of directors makes the major strategic and financial decisions for the corporation, including authorizing the issuance of stock and appointing corporate officers. Some states require that directors be named in the articles of incorporation, while others allow the owners/incorporators (those filing the paperwork) to appoint directors at the initial organizational meeting. The minimum number of directors varies based on state law, but generally three directors are required, unless there are fewer than three shareholders, in which case fewer than three directors are permitted. (Note: If a corporation only has one shareholder, all states allow that shareholder to serve as the sole director and officer of the corporation.)

3. Prepare and file articles of incorporation with the appropriate state office, usually the Secretary of State.

There will be a filing fee, which generally ranges between $70 and $200 depending on the state, but certain states have higher fees (e.g., Massachusetts ($275) and Texas ($300)). See the state pages on forming a corporation for details on state filing fees.

4. Create the corporation's bylaws.

Bylaws set out the details of how the business will be run, who will make what decisions, when decisions will be made, and the like.

You are not required to file bylaws with a state office, but you should keep a copy at your principal place a business.

5. Hold an organizational meeting.

The owners/incorporators, or the initial directors if named in the articles of incorporation, should hold an initial organizational meeting to (1) appoint directors (if not named in the articles); (2) appoint corporate officers; (3) adopt the bylaws; (4) authorize the issuance of stock; (5) set the corporation's accounting year (fiscal year); (6) adopt a stock certificate form; (7) designate a bank; and (8) select a corporate seal.

Someone present at the meeting should record minutes of the meeting, and the minutes should be stored at the corporation's principal place of business.

6. Issue stock certificates to the initial owners of the corporation.

A stock certificate is a document that certifies ownership of a specific number of shares in a corporation. Generally, shares are issued to the owners in return for capital contributions (either in cash, property, or services performed), which become the business's original operating capital. A corporation's board of directors sets the price to be paid by shareholders in return for shares.

The corporation should record the number of shares issues, to whom they were issued, and the amount paid, in a ledger kept at its principal place of business.

Issuing stock potentially implicates federal and state securities laws. Fortunately, if the corporation will issue shares to ten or less people who will actively participate in running the business, it will qualify for exemptions to federal and state securities registration requirements. Complying with federal and state securities laws is complex and burdensome -- you should contact a lawyer for assistance if you contemplate an issuance of stock to more than a few people who will not be involved in the day-to-day affairs of the business.

7. Obtain any required local licenses.

As a business doing journalism, you are not required to obtain any federal or state licenses or permits relating to carrying on a particular trade. Most local or city governments, however, require every business to obtain a basic business license, sometimes called a tax registration certificate. You get this license from your city or county. The best way to get information about fees and procedures is to contact your county or city clerk's office or other local government authority. The local chamber of commerce and other small business owners might also be a good resource for information regarding local licenses and/or permits.

8. Determine what tax obligations the corporation has, and take care of any necessary registrations.

The corporation needs to apply for an Employment Identification Number from the IRS. There is no filing fee. You can apply for an EIN:

by submitting the required information online at the IRS website. The EIN is issued immediately once the application information is validated;

by telephone at 1-800-829-4933 from 7:00 a.m. to 10:00 p.m. in your local time zone; or

by mailing or faxing Form SS-4, Application for Employer Identification Number. Instructions for Form SS-4 are available on the IRS website.

The corporation likely will need to obtain a state employer identification number or account for tax purposes. You will also have to report any new hires as you make them. See the State Law: Forming a Corporation section for details on state requirements.

You should be aware that, as the owner of a small business, you may be subject to additional federal, state and local taxes and informational filing requirements, such as self-employment taxes and employment tax withholdings and filings. Please see the Tax Obligations of Small Businesses section for details.

Corporations pay income taxes on business profits, and a separate tax return on Form 1120 must be filed for the business. Please see the Corporations page on the IRS website for details.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Jurisdiction:

United States

Subject Area:

Business Formation

State Law: Forming a Corporation

Choose your state from the list below for state-specific information on forming a corporation:

Forming a Corporation in Arizona

Steps to Create a Corporation

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Arizona. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Arizona Corporation Commission website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Arizona law requires that a corporation name contain the word "association", "bank", "company", "corporation", "limited" or "incorporated" or an abbreviation of one of these words or words or "abbreviations of like import in another language." A.R.S. § 10‑401. Additionally, your corporation name must be distinguishable from the names of other Arizona corporations and certain other entities. Id.

You can check the availability of a corporate name or reserve a corporate name for up to 120 days at the Arizona Corporation Commission website, at http://www.azcc.gov/divisions/corporations/filings/namingpolicy.asp

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Arizona law, a corporation must have at least one director. A.R.S. §§10‑801, ‑803

Arizona does not set a minimum age requirement for directors.

Directors need not be residents of Arizona or shareholders of the corporation, unless the articles of incorporation or bylaws so require. A.R.S. § 10‑802.

3. Prepare and file articles of incorporation with the Arizona Corporation Commission.

The Arizona Corporation Commission website provides simple, fill-in-the-blank forms for articles of incorporation, with instructions.
- Note that the form may ask you to list the name(s) and address(es) of the individual or individuals who will serve as the corporation's initial board of directors.
The filing fee varies depending upon the type of corporation you create, but is $60 for a domestic, for‑profit corporation. A full schedule of fees can be found at http://www.azcc.gov/divisions/corporations/filings/forms/feesch.pdf.
For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

The bylaws should indicate the number of directors that will constitute the corporation's permanent board of directors, if that number is different from the number indicated in the articles of incorporation.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Arizona statute relating to the organizational meeting at A.R.S. § 10-205.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The Arizona statutes relating to issuance of stock certificates are located in A.R.S. § 10‑625 and ‑626.

The board of directors must authorize any issuance of shares, unless this power is reserved to the shareholders in the articles of incorporation. A.R.S. § 10‑621. Shares may be issued for "consideration consisting of any tangible or intangible property or benefit to the corporation including cash, services performed or other securities of the corporation, except that neither promissory notes nor future services constitute valid consideration." Id.

7. Obtain any required local licenses.

See the general section on forming a corporation for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

If you have an employee or employees to whom you page wages for services performed in Arizona, you must register complete the Joint Tax Application for employer withholding and unemployment insurance. You can do this via the Arizona Department of Revenue website (click on "License a New Business"), which you can also use to register for other business taxes (if applicable).

Arizona current income tax rate for corporations is 6.968% of Arizona taxable income. For more information, see the Arizona Department of Revenue website, including Business Basics: A Guide to Taxes for Arizona Businesses.

Whenever you hire an employee in Arizona, you must inform both the IRS and the State of Arizona. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Arizona New Hire Reporting website.

All employers who regularly hire workers in their customary business must carry workers' compensation insurance. A.R.S. § 23-902. The Industrial Commission of Arizona administers the Arizona workers' compensation program. For more information, see their Employers' Frequently Asked Questions.

Arizona law requires employers in Arizona to use the "E-Verify" system (a free Web-based service offered by the federal Department of Homeland Security) to verify the employment authorization of all new employees hired after December 31, 2007. A.R.S. § 23-214.

For more information on starting a small business in Arizona, including a checklist of requirements, see the Arizona Commerce Authority's Small Business Services website.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Arizona

Arizona corporations must file an annual report each year. A.R.S. § 10-1622. Many corporations can file their annual report online at the Arizona Corporation Commission's website. For profit corporations must pay a $45 filing fee; non profit corporations must pay a $10 filing fee.

Arizona requires certain documents to be kept at a corporation's principal place of business. The required documents are described in A.R.S. § 10-1601.

A.R.S. § 10-1602 requires Arizona corporations to make certain documents available to shareholders of the corporation upon request.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Arizona. There is no additional paperwork that must be filed with Arizona to obtain "S" status.

Jurisdiction:

Arizona

Subject Area:

Business Formation

Forming a Corporation in California

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in California. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the California Secretary of State's website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Your business name may not be the same as, or deceptively similar to, other corporate names on file with the Secretary of State (limited exceptions apply). Additionally, the name may not contain the words "bank," " trust," "trustee," or related words.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under California law, a corporation must have at least three directors, unless there are less than three shareholders. In that case, the number of directors may be equal to or greater than the number of shareholders. For example, if the corporation has only one shareholder, the number of directors may be one or two. If the corporation has two shareholders, the number of directors may be two (or three, which is the normal minimum).

California does not set forth a minimum age or residency requirement for directors.

Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $100. The Secretary of State's website has a sample articles of incorporation for a California corporation, with instructions. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

California law requires a corporation to create bylaws. There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. File a Statement of Information with the Secretary of State.

The filing fee is $25. The Secretary of State's website has a simple, fill-in-the-blank form for the Statement of Information. Instructions are included. It must be filed within 90 days of filing the articles of incorporation.

6. Hold an organizational meeting.

See the general section on Forming a Corporation for details.

7. Issue stock certificates to the initial owners of the corporation.

See the general section on Forming a Corporation for details. You can find the California statute relating to issuance of stock certificates at Cal. Corp. Code § 416. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you will be paying at least $100 to an employee or employees in a quarter (this includes corporate officers), you are subject to California employment taxes and must register for a California employer account number within 15 days of paying that $100. You can register for employment taxes and get your account number online using the Employment Development Department's website. These taxes must be paid quarterly. For more information on being an employer, including tax information, see the California Employer's Guide.

Whenever you hire an employee in California, you must inform both the IRS and the State of California. The IRS details all of the necessary steps, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. You can find information for the state level in the California Employer's Guide and on the website for California's New Hire Reporting Program.

If you have any employees in California, you must carry workers' compensation insurance. The Division of Workers' Compensation administers this program.

There are other informational returns that you may have to file annually or semi-annually with both the IRS and the state. For more information, check out the IRS Guide To Information Returns and California Franchise Tax Board's Information Returns page.

California imposes an $800 minimum franchise tax on corporations doing business in the state. This minimum tax is separate from any income, self-employment, or payroll tax. For many, this $800 minimum tax could be a significant impediment to forming a corporation in California, especially if you have little or no expected income from your online publishing activities.

California's current income tax rate for corporations is 8.84%.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in California

California corporations must file a Statement of Information with the Secretary of State every year after the original Statement of Information is filed (see above). The filing fee is $25.

California requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Cal. Corp. Code § 1500 and Cal. Corp. Code § 1600-01.

Cal. Corp. Code § 1501 (scroll down) states that a corporation must send an annual report to shareholders within 120 days of the end of its fiscal year. This requirement does not apply, however, if the corporation has less than 100 shareholders and its bylaws expressly waive this requirement.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with California. There is no additional paperwork that you need to file with California.

California does not recognize "S" status in the same way the IRS does. California taxes the corporate profits of an S corporation before distribution to shareholders at a rate of 1.5% (as opposed to 8.84% for C corporations).

While the corporate tax rate for S corporations is lower than that for C corporations, the $800 minimum franchise tax still applies.

Additional Steps and Information about Forming a Close Corporation

California law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (thirty-five maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

The articles of incorporation of a close corporation are different from ordinary articles of incorporation. The Secretary of State's website has a sample articles of incorporation for a close corporation. Among other things, close corporation articles must contain:

a statement that all the corporation's issued shares of all classes shall be held by not more than a specified number of persons, not exceeding thirty-five; and
this statement: "This corporation is a close corporation."

Running a close corporation generally requires a shareholders' agreement. This is an agreement among all the corporation's shareholders, in which they agree to the relaxation of various corporate formalities, such as holding frequent shareholder and board meetings. If you are interested in forming a close corporation, you should contact a lawyer.

Additional Steps and Information about Forming a Special/Public Purpose Corporation

California law allows for the creation of two special corporate forms for organizations intending to serve some public benefit, beyond purely seeking profits. The two forms are known as the "flexible purpose corporation" and the "benefit corporation." Under either form, the corporation pursues some additional goal—such as environmental responsibility, or general social benefit—beyond the traditional profit-seeking of a corporation. The directors of the corporations are then immune from liability based on their pursuit of these other goals. This .pdf document explains the basics of these two forms.

The "flexible purpose" corporation, created by the Corporate Flexibility Act of 2011 and governed by the California Corporations Code, Division 1.5 (Chapters 1-11, Sections 2500-3503), allows a corporation to specify certain special purposes. The director(s) of a flexible corporation then pursue these special purposes in addition to the traditional profit motive, and are immunized from liability for pursuing the special purposes. See Section 2700(c)-(d). Section 2602 specifies the available special purposes, but in summary:
- the articles of incorporation must state either that the corporation is committed to a specific purpose, or to engaging in a specific profession (Section 2602(b)(1)); and,
- the articles must also specify at least one from a list of additional goals, which include environmental responsibility, community/societal benefit, or any purpose that a nonprofit corporation may pursue.
The Corporate Flexibility Act also contains specific requirements for reporting to shareholders (Sections 3500-3503), and specifies methods through which corporations may convert to and from a flexible purpose corporation (Sections 3300-3305).

The "benefit" corporation, governed by California Corporations Code, Division 3, Part 13 (Chapters 1-4, Sections 14600-14631), has "the purpose of creating a general public benefit." Section 14601(c) of the law defines "general public benefit" as having "a material positive impact on society and the environment," and specifies the method by which this standard should be judged.
In addition to the traditional profit goal of a corporation, the directors of a benefit corporation must also take into account "community and societal considerations," environmental effects, and other particular factors. Section 14620(b)(1-7).
Directors are immunized from liability if they properly take into account all of these factors. Section 14620(g). Directors are further immune from claims that the benefit corporation has failed to actually create a public benefit. Section 14620(f).
If you wish, you may specify additional public benefits that your benefit corporation will pursue. The list of permissible specific benefits, enumerated at Section 14601(e), includes "any other particular benefit for society or the environment." These specific benefits then become binding on the directors as well. Section 14620(b)(7).
Benefit corporations also must follow specific reporting requirements (Section 14630). Existing corporations may convert to a benefit corporation (Section 14603(a)).

Jurisdiction:

California

Subject Area:

Business Formation

Forming a Corporation in Florida

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Florida. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the Florida Department of State, Division of Corporations website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Florida law requires that a corporation name include the word "corporation," "company," or "incorporated" or the abbreviation "Corp.," "Inc.," or "Co.," or the designation "Corp," "Inc," or "Co". Additionally, your corporation name must be distinguishable from other names on file with the state, and it may not contain language stating or implying that the corporation is connected with a state or federal government agency or a corporation chartered under the laws of the United States.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Florida law, a corporation must have at least one director.

Directors must be at least eighteen years old.

Directors need not be residents of Florida or shareholders of the corporation, unless the articles of incorporation so require.

Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may -- but need not -- be named in the articles.

3. Prepare and file articles of incorporation with the Florida Department of State, Corporations Division.

The filing fee is $70. The Florida Division of Corporations website has a sample articles of incorporation for a corporation, with instructions. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Division of Corporations, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

See the General: Forming a Corporation page for details. You can find the Florida statute relating to the organizational meeting at Fla. Stat. ch. 607.0205.

6. Issue stock certificates to the initial owners of the corporation.

See the General: Forming a Corporation section for details. The Florida statute relating to issuance of stock certificates is located at Fla. Stat. ch. 607.0625. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the General: Forming a Corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

Register for Florida business taxes online using the Florida Department of Revenue Online Registration service. The state has compiled a Start-Up Kit for New Business Owners that includes tax forms and brochures for each type of tax for which you will be responsible.

Whenever you hire an employee in Florida, you must inform both the IRS and the State of Florida. You can find details of all the necessary steps including verifying work eligibility and withholding allowances on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Florida New Hire Reporting Center.

If you have four or more employees in Florida, you must carry workers' compensation insurance.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Florida's current income tax rate for corporations is 5.5%. The first $5,000 of net income is exempt from corporate tax.

9. Open a Bank Account for Your Business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Florida

Florida corporations must file an Annual Report with the Division of Corporations one year after their date of formation and every year thereafter. The filing fee is $150.

Florida requires certain documents to be kept at a corporation's principal place of business. A list of the required documents is located in Fla. Stat. ch. 607.1601 and Fla. Stat. ch. 607.1602.

Fla. Stat. ch. 607.1620 states that a corporation must send certain financial statements to shareholders within 120 days of the end of its fiscal year, unless shareholders vote to waive this requirement.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Florida.

No further paperwork needs to be filed with Florida in order to achieve "S" status, but in the corporation's first year as an S corporation it must file the informational portion of Form F-1120 (the Florida corporation income tax return). After the first year, this filing is only required if the company has federal taxable income.

Florida does not collect any personal income tax, and therefore S corporations are effectively not taxed by the state.

Jurisdiction:

Florida

Subject Area:

Business Formation

Forming a Corporation in Georgia

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Georgia. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Georgia Secretary of State's website and the First Stop Business Guide, which contain useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Georgia law requires that a corporation name include the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name must be distinguishable from other names on file with the state, and it may not contain anything which, in the reasonable judgment of the Secretary of State, is obscene. It may not exceed 80 characters, including spaces and punctuation.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Georgia law, a corporation must have at least one director.

Directors must be at least eighteen years old.

Directors need not be residents of Florida or shareholders of the corporation, unless the articles of incorporation so require.

Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may -- but need not -- be named in the articles.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $100. The Secretary of State's website provides a sample articles of incorporation, with instructions, as part of the Filing Procedures Guide, which includes other information and instructions you may find useful during this process. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

The articles of incorporation must be accompanied by Transmittal Form 227, which certifies to the state that you are filing articles and will fulfill the publishing requirement explained in the next step.

4. Publish a notice of intent to incorporate in a local newspaper.

The Secretary of State's website has a list of the qualified newspapers. The form of the notice is described in the Filing Procedures Guide. You should send the notice with $40 to the newspaper in your county within one day of filing your articles of incorporation.

5. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

6. Hold an organizational meeting.

See the general section on Forming a Corporation for details. You can find the Georgia statute relating to the organizational meeting at Ga. Code Ann. § 14-2-205 (link is to entire code; click through to Title 14, Chapter 2, Article 2 and then locate the specific provision).

7. Issue stock certificates to the initial owners of the corporation.

See the general section on Forming a Corporation for details. The Georgia statute relating to issuance of stock certificates is located at Ga. Code Ann. § 14-2-625 (link is to entire code; click through to Title 14, Chapter 2, Article 6 and then locate the specific provision). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Obtain any required local licenses.

See the general section on Forming a Corporation for details.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

Register for Georgia business taxes using the Georgia Department of Revenue website. The Department of Revenue website has detailed instructions on the different taxes and the registration process.

Whenever you hire an employee in Georgia, you must inform both the IRS and the State of Georgia. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Georgia New Hire Reporting Website.

If you have three or more employees in Georgia (including corporate officers), you must carry workers' compensation insurance.

As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Georgia's current corporate income tax rate is 6% of net income attributable to business done in Georgia. In addition, corporations formed in Georgia are subject to a net worth tax. The minimum net worth tax is $10 for a net worth less than $10,001. The maximum is $5,000 for a net worth in excess of $22 million. The net worth tax table can be found in the IT-611 Booklet under "Net Worth Tax Table."

10. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Georgia

Georgia corporations must file an Annual Registration with the Secretary of State one year after the date of formation and every year thereafter. The filing fee is $30.

Georgia requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Ga. Code Ann. §§ 14-2-1601 and 14-2-1602 (link is to entire code; click through to Title 14, Chapter 2, Article 16, Part 1, and then locate the specific provisions).

Ga. Code Ann. § 14-2-1620 (link is to entire code; click through to Title 14, Chapter 2, Article 16, Part 2, and then locate the specific provision) states that a corporation must send certain financial statements to shareholders within four months of the end of its fiscal year and before the annual meeting of shareholders (if the meeting is less than four months after the end of the fiscal year).

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Georgia. There is no additional paperwork that you need to file with Georgia in order to obtain "S" status.

If the corporation has non-resident shareholders, however, every year they must file Form 600S-CA, agreeing to pay Georgia income tax on their proportionate part of the corporation's Georgia taxable income.

Even if your S corporation has no taxable income, you must still file a Georgia corporate income tax return on Form 600-S every year.

Additional Steps and Information About Forming a Close Corporation

Georgia law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (fifty maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

In Georgia, the articles of incorporation of a close corporation must contain a statement that the corporation is "a statutory close corporation." The articles (or bylaws or a shareholders' agreement) may include a provision stating that the corporation will be managed by its shareholders rather than a board of directors pursuant to Ga. Code Ann. § 14-2-922 (link is to entire code; click through to Title 14, Chapter 2, Article 9, and then locate the specific provision). If you are interested in forming a close corporation, you should contact a lawyer.

Jurisdiction:

Georgia

Subject Area:

Business Formation

Forming a Corporation in Illinois

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Illinois. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Illinois Secretary of State's website and its Guide to Organizing Domestic Corporations, which contain valuable resources and information.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Illinois law requires that a corporation name contain the word "corporation," "company," "incorporated," or "limited," or an abbreviation of one of such words. Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State. Other more obscure limitations apply -- see 805 Ill. Comp. Stat. 5/4.05 for details.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Illinois law, a corporation must have at least one director.

There is no minimum age requirement for directors, but incorporators (i.e., those who file the paperwork) must be at least eighteen years old.

Directors need not be residents of Illinois or shareholders of the corporation, unless the articles of incorporation so require.

The articles of incorporation may set forth the number of directors that will constitute the corporation's board of directors and identify the initial director or directors by name and address, but this is not required. If the number of directors is not set in the articles, it should be set in the bylaws.

3. Prepare and file articles of incorporation with the Secretary of State.

The Secretary of State's website provides a fill-in-the-blank form for the articles of incorporation. The filing fee is $150 plus a franchise tax equal to fifteen hundredths (15/100) of 1% of the total amount of money the corporation will receive in exchange for the initial issuance of stock. The minimum franchise tax is $25, making the minimum filing fee $175. You can also file articles of incorporation using an online interface, but there is an additional $100 fee for expedited treatment. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Record the certificate of incorporation and articles with the Recorder of Deeds.

After you file articles of incorporation, the Secretary of State will send you a "certificate of incorporation," which indicates that the state has accepted your articles. Within fifteen days of receiving this certificate, you must record both it and your articles of incorporation with the Office of the Recorder of Deeds in the county where your office is located.

5. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

6. Hold an organizational meeting.

See the general section on Forming a Corporation for details. You can find the Illinois statute relating to the organizational meeting at 805 Ill. Comp. Stat. 5/2.20 (scroll down).

7. Issue stock certificates to the initial owners of the corporation.

See the general section on Forming a Corporation for details. The Illinois statute relating to issuance of stock certificates is located at 805 Ill. Comp. Stat. 5/6.35 (scroll down). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Obtain any required local licenses.

See the general section on Forming a Corporation for details.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Illinois, you must register with the Illinois Department of Employment Security. You can find additional information on the Tax Registration Page of the Illinois Business Portal.

All new business owners must register for business taxes with the Illinois Department of Revenue. For details, see the the Tax Registration Page of the Illinois Business Portal.
Whenever you hire an employee in Illinois, you must inform both the IRS and the State of Illinois. The IRS details all of the necessary steps to complete, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. You can find information on what to do on the state level on the New Hire Reporting section of the Illinois Business Portal.

If you have one or more employees in Illinois, you must carry workers' compensation insurance. You may choose to obtain workers' compensation insurance for yourself, but you do not need to. (If you have a workers' compensation policy for your employees, you must contact your insurance company if you DO NOT want to be covered.)

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Illinois's corporate income tax rate is 4.8% plus a 2.5% personal property replacement tax (7.3% total).

Illinois also imposes a franchise tax on corporations. The tax is based on the corporation’s paid-in capital in Illinois. The initial franchise tax rate is 0.15% of paid-in capital in Illinois, and the minimum payment is $25. After a corporation’s first year, the franchise tax is due annually at a rate of .10%, again with a minimum of $25.00.

10. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Illinois

Illinois corporations must file an Annual Report with the Secretary of State at the end of each business year. The filing fee is $75. You can also file the Annual Report through the Secretary of State's online interface.

Illinois requires certain documents to be kept at a corporation's principal place of business. The required documents are described in 805 Ill. Comp. Stat. 5/7.75 (scroll down).

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Illinois. There is no additional paperwork that you need to file in Illinois.

Illinois does not recognize "S" status in the same way the federal government does. Illinois imposes personal property replacement tax on the corporate profits of an S corporation at a rate of 1.5% (as opposed to a total of 7.3% for C corporations). Here is the Small Business Corporation Replacement Tax Return.

Additional Steps and Information about Forming a Close Corporation

Illinois law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (thirty-five maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

The articles of incorporation of a close corporation are different from ordinary articles of incorporation. The Secretary of State's website has a fill-in-the-blank form for articles of incorporation for a close corporation. Articles for a close corporation must contain a heading stating that it is being organized as a close corporation.

Running a close corporation generally requires a shareholders' agreement. This is an agreement among all the corporation's shareholders, in which they agree to the relaxation of various corporate formalities, such as holding frequent shareholder and board meetings. If you are interested in forming a close corporation, you should contact a lawyer.

Jurisdiction:

Illinois

Subject Area:

Business Formation

Forming a Corporation in Indiana

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Indiana. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Indiana Secretary of State's website, which has extremely useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Indiana law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Indiana law, a corporation must have at least one director.

There is no minimum age requirement.

Directors need not be residents of Indiana or shareholders of the corporation, unless the articles of incorporation so require.

Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may be named in the articles, but this is not required.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $90. The Secretary of State's website provides a simple, fill-in-the-blank form for articles of incorporation. Alternatively, you can file articles of incorporation online using the accessIndiana interface. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

See the Forming a Corporation page for details. You can find the Indiana statute relating to the organizational meeting at Ind. Code § 23-1-21-5 (scroll down).

6. Issue stock certificates to the initial owners of the corporation.

See the Forming a Corporation section for details. The Indiana statutes relating to issuance of stock certificates are located in Chapter 26 of Article 1 of Title 23 of the Indiana Code. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the Forming a Corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Indiana (including corporate officers), register for employment/withholding taxes online using the BT-1 Business Tax Application. The Department of Revenue provides instructions on the registration process.

Whenever you hire an employee in Indiana, you must inform both the IRS and the State of Indiana. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Indiana New Hire Reporting Center website.

If you have employees in Indiana (including corporate officers), you must carry workers' compensation insurance. You may choose to purchase it for yourself, but you do not have to do so.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Indiana's current corporate income tax rate is 8.5% of gross income.

9. Open a Bank Account for Your Business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Indiana

Indiana corporations must file a Business Entity Report with the Secretary of State every two years after your date of formation. The filing fee is $30, and the form can be filed online using the accessIndiana interface.

Indiana requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Chapter 52 of Article 1 of Title 23 of the Indiana Code.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Indiana. There is no additional paperwork that must be filed with Indiana to obtain "S" status.

If the corporation has nonresident shareholders, you must withhold income tax at a rate of 3.4% on distributions to them. You can find instructions for how to do this withholding on page 3 of the S Corporation Income Tax Booklet. Exception: Some states have entered into a "reverse-credit agreement" with Indiana, which means that if a nonresident shareholder resides in Arizona, California, Oregon, or the District of Columbia, income tax does not need to be withheld.

Indiana S corporations must file Form IT-20S - the Indiana S Corporation Income Tax Return (scroll through) every year.

Jurisdiction:

Indiana

Subject Area:

Business Formation

Forming a Corporation in Massachusetts

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Massachusetts. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Secretary of the Commonwealth, Corporations Division website, which has helpful resources and information.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Massachusetts law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited" or the abbreviation "corp.," "inc.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name may not be the same as, or deceptively similar to, other names on file with the Secretary of the Commonwealth (limited exceptions apply).

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Massachusetts law, a corporation must have a board of directors consisting of at least one person; there is no maximum limit on the number of directors.

The number of directors that comprise the board should be specified in the corporation's articles of organization or bylaws. If the articles of organization or bylaws do not define the size of the board of directors, the Massachusetts default rules apply: if the corporation has three or more shareholders, the corporation must have no fewer than three directors. If the corporation has only two shareholders, there may be no fewer than two directors on the board. You can find the Massachusetts statute relating to directors of corporations at Mass. Gen. Laws ch. 156D, § 8.03.

There is no minimum age requirement for directors.

Directors need not be residents of Massachusetts or shareholders of the corporation, unless the articles of organization or bylaws so require.

3. Prepare and file articles of organization with the Secretary of the Commonwealth.

The filing fee is $275. The Secretary of the Commonwealth, Corporations Division website provides a fill-in-the-blank form for the articles of organization. Alternatively, you can file articles online using the Secretary of the Commonwealth's online filing system. For general information on corporate articles of organization (usually called "articles of incorporation"), please see the Articles of Incorporation page.

The form for the articles of organization asks for the names and addresses of the individual or individuals who will serve as the corporation's initial director(s), president, treasurer, and secretary of the corporation. If there is only one shareholder, one person can fill all of these roles. This information does not become a permanent part of the corporation's articles.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

Even if you listed the names and addresses of the corporation's initial directors in the form for the articles of organization (see above), you should set forth in the bylaws the number of directors that will constitute the corporation's board of directors.

5. Hold an organizational meeting.

See the Forming a Corporation page for details. You can find the Massachusetts statute relating to the organizational meeting at Mass. Gen. Laws ch. 156D, § 2.05.

6. Issue stock certificates to the initial owners of the corporation.

See the Forming a Corporation section for details. The Massachusetts statute relating to issuance of stock certificates is located at Mass. Gen. Laws ch. 156D, § 6.25. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the Forming a Corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Massachusetts (including corporate officers), you will need to register for Massachusetts withholding-payroll taxes using the Massachusetts Department of Revenue business registration page. If you have questions about business taxes, the Massachusetts Department of Revenue has many publications that should be able to answer your questions. The Guide to Employer Tax Obligations is especially useful.

Whenever you hire an employee in Massachusetts, you must inform both the IRS and the Commonwealth of Massachusetts. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Massachusetts New Hire Reporting Center website.

If you have employees in Massachusetts, you must carry workers' compensation insurance. The Department of Industrial Accidents administers this program.

As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Massachusetts's current tax rates for corporations are 9.5% of gross income and .26% of net worth or tangible property (if any). Importantly, the combined minimum tax is $456, which is is separate from any personal income, self-employment, or payroll taxes. Sole proprietors, partnerships, and LLCs are not subject to this minimum tax.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Massachusetts

Massachusetts corporations must file an Annual Report with the Secretary of the Commonwealth every year after the date of formation. The filing fee is $125. You can file the Annual Report online using the Secretary of the Commonwealth's online filing system.

Massachusetts requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Mass. Gen. Laws ch. 156D, § 16.01 and Mass. Gen. Laws ch. 156D, § 16.02.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Massachusetts. There is no additional paperwork that must be filed with Massachusetts to obtain "S" status.

S Corportions must file Tax Form 355S with the Massachusetts Department of Revenue every year.

While S corporation do not pay state income tax on corporate profits (unless gross receipts exceed $6,000,000), they are subject to the .26% net worth tax and the $456 minimum tax.

Jurisdiction:

Massachusetts

Subject Area:

Business Formation

Forming a Corporation in Michigan

Steps to Create a Corporation

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Michigan. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Michigan Department of Labor & Economic Growth, Bureau of Commercial Services website, which has useful resources, but is difficult to navigate.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Michigan law requires that a corporation name contain the word "corporation," "company," "incorporated," or "limited" or one of the following abbreviations: "corp.," "co.," "inc.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the state.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Michigan law, a corporation must have at least one director.

There is no minimum age requirement for directors.

Directors need not be residents of Michigan or shareholders of the corporation, unless the articles of incorporation or bylaws so require.

The number of directors that will constitute the corporation's board of directors should be set forth in the bylaws.

3. Prepare and file articles of incorporation with the Department of Labor & Economic Growth, Bureau of Commercial Services, Corporation Division.

The Department of Labor & Economic Growth website has a simple, fill-in-the-blank form for articles of incorporation. The filing fee depends on the number of shares authorized in the articles; if 60,000 or fewer shares are authorized, then the filing fee is $60. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

See the Forming a Corporation page for details. You can find the Michigan statute relating to the organizational meeting at Mich. Comp. Laws § 450.1223.

6. Issue stock certificates to the initial owners of the corporation.

See the Forming a Corporation section for details. The Michigan statutes relating to issuance of stock certificates are found in three provisions: Mich. Comp. Laws § 450.1331, Mich. Comp. Laws § 450.1332, and Mich. Comp. Laws § 450.1336. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the Forming a Corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Michigan (including corporate officers), you need to register for Michigan business taxes using the Business Tax e-Registration website. There, you will find forms and instructions for all business taxes. You can find more information on this process in the Michigan Business Taxes Registration Booklet.

Whenever you hire an employee in Michigan, you must inform both the IRS and the State of Michigan. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Michigan New Hire Reporting Center website.

If you have three or more employees in Michigan or have employed anyone for at least thirty-five hours per week for thirteen or more weeks, you must carry workers' compensation insurance. If you are not required to have workers' compensation and you choose not to do so, you must get a certificate of exemption from the Insurance Division. More information is available in An Overview of Workers' Compensation in Michigan.

As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

As of January 1, 2008, a new business tax regime -- called the Michigan Business Tax -- takes effect in Michigan. Under it, qualifying small businesses in Michigan will pay a tax equal to 1.8% of adjusted business income. Probably all small online publishing businesses will qualify -- the law requires that officers of the corporation not be paid more than $160,000, gross receipts not exceed $18 million, and business income not exceed $1.3 million. For more information on the Michigan Business Tax, see the Michigan Business Tax FAQ on the Michigan Department of Treasury website.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Michigan

Michigan corporations must file an Annual Report every year with the Department of Labor & Economic Growth before May 15. The filing fee is $25, and you can file the form online via the FILEonline Service.

Michigan requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Mich. Comp. Laws § 450.1485 and Mich. Comp. Laws § 450.1487.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Michigan. There is no additional paperwork that must be filed with Michigan to obtain "S" status.

S corporations are subject to the Michigan Business Tax. See the Michigan Business Tax FAQ for details.

Jurisdiction:

Michigan

Subject Area:

Business Formation

Forming a Corporation in New Jersey

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in New Jersey. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the New Jersey Division of Revenue website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

New Jersey law requires that a corporation name contain the word "corporation," "company," "incorporated," or an abbreviation of one of those words, or abbreviations of like import in other languages. Additionally, your corporation name must be distinguishable from other names on file with the state.

For information about checking the availability of your desired business name in New Jersey, see the Check Business Name Availability page on the Division of Revenue's website.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under New Jersey law, a corporation must have at least one director.

Directors must be at least eighteen years of age.

Directors need not be residents of New Jersey or shareholders of the corporation, unless the certificate of incorporation or the bylaws so require.

The certificate of incorporation must set forth the number of directors constituting the first board and the names and addresses of the persons who are to serve as directors.

3. Prepare and file a certificate of incorporation with the Division of Revenue.

The filing fee is $125. The Division of Revenue website has a simple, fill-in-the-blank form for all new business filings, which you can print out and mail to the Division of Revenue. Instructions are included with the form. Alternatively, you can use the New Jersey Division of Revenue On-line Business Filing and Registration Service. For general information on the certificate of incorporation (usually called "articles of incorporation"), please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the New Jersey statute relating to the organizational meeting at N.J. Stat § 14A:2-8 (link is to the entire code, you need to click through to Title 14A, Article 2, and then locate the specific provision).

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The New Jersey statutes relating to issuance of stock certificates are located in N.J. Stat § 14A:7-11 (link is to the entire code, you need to click through to Title 14A, Article 7, and then locate the specific provision). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the general section on orming a corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

All new businesses must register with the Division of Revenue using the Business Registration Application. Upon registering, you will receive the forms, returns, instructions, and other information needed to comply with New Jersey law.

Whenever you hire an employee in New Jersey, you must inform both the IRS and the State of New Jersey. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the New Jersey New Hire Reporting Directory.

As a corporation, you must carry workers' compensation insurance. More information is available in An Employer's Guide to Workers' Compensation in New Jersey. You may choose to obtain insurance for yourself, but are not required to do so.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

New Jersey's current corporate income tax rate for entities with net income greater than $100,000 is 9.0%. If net income was between $50,001 and $100,000, the rate is 7.5%. For businesses with $50,000 or less, the rate is 6.5%. The minimum tax for businesses with New Jersey gross receipts under $100,000 is $500.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN) and a copy of the certificate of incorporation. Here is one example of the documentation that banks ask for.

Note: New Jersey law requires incorporators to be at least eighteen years old.

Other Notable Requirements for Maintaining a Corporation in New Jersey

New Jersey corporations must file an Annual Report using the New Jersey Division of Revenue On-line Business Filing and Registration Service every year after the company's date of formation. The filing fee is $50. Corporations are not required to file this report in the year in which they are formed.

New Jersey requires certain documents to be kept at a corporation's principal place of business. The required documents are described in N.J. Stat § 14A:5-28 (link is to the entire code, you need to click through to Title 14A, Article 5, and then locate the specific provision).

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with New Jersey.

To have the "S" election recognized by New Jersey, you must file Form CBT-2553, which is included in the Business Registration Packet. You can file it online using the New Jersey Division of Revenue Online Business Filing and Registration Service

Jurisdiction:

New Jersey

Subject Area:

Business Formation

Forming a Corporation in New York

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in New York. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the New York Department of State's website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

New York law requires that a corporation name contain the word "Incorporated," "Corporation," or "Limited," or one of the following abbreviations: "Inc.," "Corp." or "Ltd." Additionally, your corporation name must be distinguishable from the names of other corporations, limited liability companies, and limited partnerships already on file with the Department of State. There are a large number of words that cannot be included in the name without prior approval. For a full list, see N.Y. Bus. Corp. Laws § 301.

You can search for the availability of your proposed name by writing to the Department of State, Division of Corporations, 41 State Street, Albany, NY 12231. The written inquiry should state that you wish to determine the availability of a corporate name (or names) and list the name (or names) to be searched. There is a $5 fee for each name, which must accompany the request. Searching the availability of a corporate name does not reserve the name. You may also search the New York Corporation and Business Entity Database to help you identify names that have already been taken, but this database might not be complete.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under New York law, a corporation must have at least one director.

Directors must be at least eighteen years old.

Directors need not be residents of New York or shareholders of the corporation, unless the certificate of incorporation or bylaws so require.

It is a good idea to set forth the number of directors who will constitute the board of directors in the bylaws. If you do not do so, the number will be one.

3. Prepare and file a certificate of incorporation with the Department of State.

The filing fee is $125, plus a minimum tax of $10 based on the number of shares authorized in the certificate. The Department of State's website has a fill-in-the-blank form for the certificate of incorporation. It also offers some basic information on filing a certificate of incorporation, as well as a more detailed guide on Forming a Business Corporation in New York, which is a must see.

Every business corporation must designate in its certificate the number of shares that the corporation has authority to issue and must state the "par value" of the shares or whether they are without "par value." Shares without par value may be issued or sold at any price. Shares with a stated par value cannot be issued or sold at a price less than the stated par value. By default, the form developed by the Department of State contains an authorized stock structure of 200 shares with no par value. Most corporations are formed with 200 shares no par value. Nothing more needs to be added unless you wish to have a different stock structure. If this is the case, delete the present statement and insert the desired number of shares and a statement of their par value or a statement that they are without par value. The $10 minimum tax (see above) authorizes the corporation to issue 200 shares no par value. Corporations wishing to authorize more than 200 shares no par value or par value shares totaling more than $20,000 must pay more tax -- the rate is 5 cents per share of no par value stock and 1/20 of one percent (.05%) of the par value of the shares that have a stated par value.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the New York statute relating to the organizational meeting at N.Y. Bus. Corp. Law § 404.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The New York statute relating to issuance of stock certificates is located at N.Y. Bus. Corp. Laws § 508. Unless the certificate of incorporation states otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

See the general section on forming a corporation for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

Register for New York employment taxes. You can learn more about and register for employment taxes at the New York State Department of Taxation and Finance's Business Taxpayer Home Page.

Whenever you hire an employee in New York (including corporate officers), you must inform both the IRS and the State of New York. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information at the New York New Hire Home Page.

If you have employees in New York, you must carry workers' compensation insurance.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

New York's corporate income tax has a complex structure. You are encouraged to discuss your New York state tax obligations with a tax accountant.

If your business is located or does any business in New York City, you may be subject to the NYC General Corporation Tax. For more information, see New York City Taxes.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Note: New York law requires that incorporators (i.e., the people filing the paperwork) be at least eighteen years old.

Other Notable Requirements for Maintaining a Corporation in New York

New York corporations must file a Biennial Statement with the Department of Revenue every two years after the date of formation. The Biennial Statement is made on a form provided by the Department of State. For corporations, the Biennial Statement is automatically mailed to the address of the principal executive office or, if none is listed in the certificate, the form is mailed to the address for service of process. The Biennial Statement is mailed one month prior to its due date. The filing fee is $9.

New York requires certain documents to be kept at a corporation's principal place of business. The required documents are described in N.Y. Bus. Corp. Laws § 624 (link is to entire code, you need to click on the Business Corporation section, then choose Article 6 and locate the specific provision).

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with New York. There is no additional paperwork that must be filed with New York to obtain "S" status.

New York subjects S corporations to a fixed-dollar minimum corporate tax. You are encouraged to discuss your New York tax obligations with a tax accountant.

Jurisdiction:

New York

Subject Area:

Business Formation

Forming a Corporation in North Carolina

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in North Carolina. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the North Carolina Secretary of State's website, which has extremely useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

North Carolina law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).

You can search for name availability using the Search for a Corporation by Name page on the Secretary of State's website.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under North Carolina law, a corporation must have at least one director.
There is no minimum age requirement for directors.
Directors need not be residents of North Carolina or shareholders of the corporation, unless the articles of incorporation or bylaws so require.
Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may be named in the articles, but this is not required.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $125. The Secretary of State's website provides a fill-in-the-blank form for articles of incorporation, with instructions. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the North Carolina statute relating to the organizational meeting at N.C. Gen. Stat. § 55-2-05.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The North Carolina statutes relating to issuance of stock certificates are located in N.C. Gen. Stat. § 55-6-25 and N.C. Gen. Stat. § 55-6-26. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

7. Obtain any required local licenses.

See the general forming a corporation for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees (including corporate officers), you need to register for NC employment taxes at any of the taxpayer service centers located throughout the state. The Department of Revenue has a directory of taxpayer service centers that will guide you to the most convenient location.

Whenever you hire an employee in North Carolina, you must inform both the IRS and the State of North Carolina. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the North Carolina New Hire Reporting website.

If you have three or more or employees (including corporate officers and shareholders who otherwise work for the company), you are required to carry workers' compensation insurance. The North Carolina Industrial Commission administers the program. Its website has a useful FAQ.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

North Carolina's current tax rate for corporations is 6.9% of gross income, plus a franchise tax. The minimum franchise tax is $35.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in North Carolina

North Carolina corporations must file an Annual Report every year. You may file online at the Secretary of State’s website using the Online Annual Report Editor. The fee is $18 to file online. Alternatively, you may file a paper copy with the Department of Revenue, along with your tax return. You should be able to download a paper copy of the report from the Secretary of State's website, but the link was not working at the time of writing. The filing fee for paper filing is $25.

North Carolina requires certain documents to be kept at a corporation's principal place of business. The required documents are described in N.C. Gen. Stat. § 55-16-01 and N.C. Gen. Stat. § 55-16-02.

N.C. Gen. Stat. §55-16-20 requires North Carolina corporations to make certain annual financial statements available to shareholders of the corporation.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with North Carolina. There is no additional paperwork that must be filed with North Carolina to obtain "S" status.

North Carolina S corporations must file the S Corporation Tax Return every year with the Department of Revenue.

If an S corporation has shareholders who are not residents of North Carolina, the company must submit Form NC-NA with its first tax return (one form for each non-resident shareholder). This form must be signed by the shareholder, who agrees to pay North Carolina income tax on their share of S corporation income.

While S corporations are not subject to corporate income tax in North Carolina, they are responsible for paying the franchise tax (see above). The minimum franchise tax is $35.

Jurisdiction:

North Carolina

Subject Area:

Business Formation

Forming a Corporation in Ohio

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Ohio. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Ohio Secretary of State's website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Ohio law requires that a corporation name end with or include the word or abbreviation "company," "co.," "corporation," "corp.," "incorporated," or "inc." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply), and may not contain any language that indicates or implies that the corporation is connected with a government agency, another state, or the United States.

The Secretary of State's website has advice and links to help you check the availability of your desired business name.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Ohio law, a corporation must have at least three directors, unless there are less than three shareholders. In that case, the number of directors may be equal to or greater than the number of shareholders. For example, if the corporation has only one shareholder, the number of directors may be one or two. If the corporation has two shareholders, the number of directors may be two (or three, which is the normal minimum).

There is no minimum age requirement for directors.

Directors need not be residents of Ohio or shareholders of the corporation, unless the articles or the corporation's "regulations" so require.

Either the articles of incorporation or the corporation's "regulations" should state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may be named in the articles, but this is not required.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $125. The Secretary of State's website provides a fill-in-the-blank form for articles of incorporation, with instructions. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's "regulations."

Where other states generally require a corporation to create bylaws, Ohio law speaks of "regulations." Despite the different name, the regulations are the same as ordinary bylaws. There is no set criteria for them, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. Making matters somewhat more complicated, Ohio law also permits directors to adopt "bylaws" to regulate board affairs. These "bylaws" must be consistent with the regulations and the articles of incorporation. You are not required to file the regulations with the Secretary of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Ohio statute relating to the organizational meeting at Ohio Rev. Code § 1701.10.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation section for details. The Ohio statutes relating to issuance of stock certificates are located in Ohio Rev. Code § 1701.24 and Ohio Rev. Code § 1701.25. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

7. Obtain any required local licenses.

See the general section on forming a corporation section for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Ohio (including corporate officers), you need to register for Ohio employment taxes using the Ohio Business Gateway.

Whenever you hire an employee in Ohio, you must inform both the IRS and the State of Ohio. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Ohio New Hire Reporting Center.

If you have an employee or employees in Ohio, you need to obtain workers’ compensation coverage or be granted the privilege of self-insurance for liabilities. The Ohio Bureau of Worker's Compensation administers the program.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in North Carolina

Ohio requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Ohio Rev. Code § 1701.37.

Ohio Rev. Code § 1701.378 requires Ohio corporations to provide annual financial statements to shareholders of the corporation.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Ohio. There is no additional paperwork that must be filed with Ohio to obtain "S" status.

S corporations should annually file the Ohio information tax return -- FT 1120S, Notice of S Corporation Status.

Additional Steps and Information about Forming a Close Corporation

Ohio law has a provision relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

In Ohio, forming a close corporation requires that all shareholders of the corporation assent to a shareholders' agreement in writing, and that the shareholders' agreement be set forth in the articles of incorporation or the regulations, or in a written agreement that is entered into the minutes of a shareholders' meeting. For details, please see Ohio Rev. Code § 1701.591. If you are interested in forming a close corporation, you should contact a lawyer.

Jurisdiction:

Ohio

Subject Area:

Business Formation

Forming a Corporation in Pennsylvania

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Pennsylvania. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Pennsylvania Department of State, Corporations Bureau website, which has useful resources and information.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Pennsylvania law requires that a corporation name contain the word "corporation," "company," "incorporated" or "limited," an abbreviation of any of these words, or words or abbreviations of like import in languages other than English. Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply). There are a large number of words that cannot be included in the name without prior approval. For a full list, see 15 Pa. Cons. Stat. § 1303 (link is to entire code, choose Title 15, Part II, Subpart B, Article B, Chapter 13, Subchapter A, and then locate the specific provision).

The Name Availabilities page on the Pennsylvania Department of State's website has additional information about checking the availability of your desired business name in Pennsylvania. You can also use the Search for a Business Entity page.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Pennsylvania law, a corporation must have at least one director.

Directors must be at least eighteen years of age.

Directors need not be residents of Pennsylvania or shareholders of the corporation, unless the articles of incorporation or bylaws require.

The corporation's bylaws should state the the number of directors that will constitute the corporation's board of directors. If no number is designated, the corporation will be required to have three directors.

3. Prepare and file articles of incorporation with the Department of State, Corporations Bureau.

The filing fee is $125. The Pennsylvania Department of State's website provides a fill-in-the-blank form for articles of incorporation. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. File a Docketing Statement.

When you file articles of incorporation, you must also file a Docketing Statement with the Department of State. The docketing statement contains only basic information like the name and type of business organization and a description of business activities. There is no fee to file this form.

5. Fulfill the "advertising requirement."

You need to publish a statement of your intent to file or the actual filing of the articles of incorporation in two newspapers of general circulation, one of which is a legal journal. The Department of State's website has a Geographical Listing of Legal Publications to help you find a legal journal in your county. You don't need to send proof of advertising to the Department of State, but you should file the proof with the minutes of the corporation. The advertisements must contain the name of the proposed corporation and a statement that the corporation is to be or has been organized under the provisions of the BCL of 1988.

6. Create the corporation's bylaws

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Department of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

7. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Pennsylvania statute relating to the organizational meeting at 15 Pa. Cons. Stat. § 1310 (link is to entire code, choose Title 15, Part II, Subpart B, Article B, Chapter 13, Subchapter A, and then locate the specific provision).

8. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The Pennsylvania statute relating to issuance of stock certificates is located in 15 Pa. Cons. Stat. § 1528 (link is to entire code, choose Title 15, Part II, Subpart B, Article B, Chapter 15, Subchapter B, and then locate the specific provision). Unless the bylaws state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

9. Obtain any required local licenses.

See the general section on forming a corporation for details.

10. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Pennsylvania (including corporate officers), you need to register for Pennsylvania employment taxes through the Online PA-100 interface or the Online Business Registration Interview interface.

Whenever you hire an employee in Pennsylvania, you must inform both the IRS and the Commonwealth of Pennsylvania. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Pennsylvania New Hire Reporting website.

If you have an employee or employees in Pennsylvania, you are required to carry workers' compensation insurance. The Pennsylvania Department of Labor & Industry administers the program.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Pennsylvania's corporate tax is comprised of a corporate income tax and a capital stock tax. The net income tax is collected at a rate of 9.99%. The capital stock tax is somewhat complicated, determined by first adding net income divided by .095 to net worth multiplied by .75 (NI/.095 + .75*NW). If the number you get is less than $300,000, you do not owe capital stock tax. If the number you get is greater than $300,000, the tax will amount to .389% (.00389) of all dollars over $300,000. The capital stock tax is being phased out and will no longer be in effect starting in 2011. Most small online publishing operations probably will not have sufficient net worth or income to trigger the capital stock tax obligation.

11. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Note: Pennsylvania law requires incorporators (i.e., those people who file the paperwork) to be at least eighteen years old.

Other Notable Requirements for Maintaining a Corporation in Pennsylvania

Pennsylvania requires certain documents to be kept at a corporation's principal place of business. The required documents are described in 15 Pa. Cons. Stat. § 1508 (link is to entire code, choose Title 15, Part II, Subpart B, Article B, Chapter 13, Subchapter A, and then locate the specific provision).

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Pennsylvania.

When you receive notification from the IRS that your "S" status has been approved, send a copy of this notification to the Pennsylvania Department of Revenue.

S corporations must file Form PA-20S (an information return) with the Department of Revenue every year.

While S corporations are not subject to corporate income tax in Pennsylvania, they are responsible for paying the capital stock tax, described above. As noted, most small online publishing operations probably will not have sufficient net worth or income to trigger the capital stock tax obligation, and in any event this tax will be phased out by 2011.

Additional Steps and Information about Forming a Close Corporation

Pennsylvania law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

The articles of incorporation of a close corporation are slightly different from ordinary articles of incorporation. In Pennsylvania, you use the same fill-in-the-blank form used for ordinary articles of incorporation, but check the box for "Business-statutory close" at the top of the first page. Additionally, the form contains a required statement that the close corporation will not make any offering of its stock that would constitute a "public offering" for purposes of the federal securities laws.

In Pennsylvania, shareholders of a close corporation can adopt a bylaw that provides for the business and affairs of the corporation to be managed by the shareholders rather than by a board of directors. While this looks appealing, complex requirements apply to close corporations, and operating one generally requires that all or most of the shareholders enter into a shareholders' agreement. If you are interested in forming a close corporation, you should contact a lawyer.

Jurisdiction:

Pennsylvania

Subject Area:

Business Formation

Forming a Corporation in Texas

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Texas. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Texas Secretary of State's website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Texas law requires that a corporation name contain the word "company," "corporation," "incorporated," or "limited," or an abbreviation of one of those words. Additionally, your corporation name may not be the same as, or deceptively similar to, another name on file with the Secretary of State.

The Texas Secretary of State can provide a preliminary determination of business name availability. Call (512) 463-5555, dial 7-1-1 for relay services, or e-mail your name inquiry to corpinfo@sos.state.tx.us.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Texas law, a corporation must have at least one director.

There is no minimum age requirement for directors.

Directors need not be residents of Texas or shareholders of the corporation, unless the certificate of formation or bylaws so require.

The certificate of formation must set forth the number of directors that will constitute the initial board of directors and provide their names and addresses. The bylaws should set forth the number of directors that will constitute the corporation's permanent board of directors, if that number is different from the number of directors in the initial board.

3. Prepare and file a certificate of formation with the Secretary of State.

The filing fee is $300. The Secretary of State's website provides a a simple, fill-in-the-blank form for the certificate of formation, with helpful instructions. For general information on the certificate of formation (usually called "articles of incorporation"), please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Texas statute relating to the organizational meeting at Texas Bus. Orgs. Code § 21.059.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The Texas statute relating to issuance of stock certificates is located in Texas Bus. Orgs. Code § 3.202. Unless the certificate of formation states otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

7. Obtain any required local licenses.

See the general section on forming a corporation for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Texas (including corporate officers), you are subject to Texas employment taxes. You can register online using the Texas Employer Portal. For more information on being an employer in Texas, request a copy of the Employer Handbook.

Whenever you hire an employee in Texas, you must inform both the IRS and the State of Texas. You can find details of all the necessary steps including verifying work eligibility and withholding allowances on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Texas Employer Portal.

Texas employers can choose whether or not to provide workers' compensation coverage to their employees. The Texas Department of Insurance, Division of Workers' Compensation administers the program.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Texas imposes a franchise tax on corporations. The rate is 1% of income. It is only collected from companies whose gross revenues are greater than $300,000. For more information, see the Revised Texas Franchise Tax page.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the certificate of formation, and a resolution identifying authorized signers if those names are not listed in the certificate. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Texas

Texas requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Texas Bus. Orgs. Code § 3.151 and Texas Bus. Orgs. Code § 21.173.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Texas. There is no additional paperwork that must be filed with Texas to obtain "S" status.

S corporations are subject to Texas's franchise tax (discussed above).

Additional Steps and Information about Forming a Close Corporation

Texas law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

The certificate of formation for a close corporation is different from an ordinary certificate of formation. In particular, it must include the sentence: "This corporation is a close corporation." Additionally, shareholders of a close corporation can enter into a shareholders' agreement that provides for the corporation to be managed by shareholders rather than a board of directors. If they choose to do so, the certificate of formation must set forth the names and addresses of the persons who, pursuant to the shareholders' agreement, will perform the functions of the initial board of directors.

Forming and operating a close corporation is complex. If you are interested in forming a close corporation, you should contact a lawyer. For more information, see the Close Corporation page on the Secretary of State's website.

Jurisdiction:

Texas

Subject Area:

Business Formation

Forming a Corporation in Virginia

Steps to Create a Corporation

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Virginia. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Virginia State Corporation Commission, Office of the Clerk website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Virginia law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).

You can check the availability of a corporate name by contacting the Clerk's Office of the Virginia State Corporation Commission at (804) 371-9733 or (866) 722-2551.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Virginia law, a corporation must have at least one director.

Virginia does not set a minimum age requirement for directors.

Directors need not be residents of Virginia or shareholders of the corporation, unless the articles of incorporation or bylaws so require.

3. Prepare and file articles of incorporation with the State Corporation Commission of Virginia.

The State Corporation Commission, Office of the Clerk website provides a simple, fill-in-the-blank form for articles of incorporation, with instructions. The filing fee is $25, plus and there is a charter fee of $50 for each 25,000 shares of stock (or fraction thereof) authorized in the articles. It is unlikely that your small business will need to authorize more than 25,000 shares, so the total fee ordinarily will be $75. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

Note that the form asks you to list the name(s) and address(es) of the individual or individuals who will serve as the corporation's initial board of directors.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

The bylaws should indicate the number of directors that will constitute the corporation's permanent board of directors, if that number is different from the number indicated in the articles of incorporation.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Virginia statute relating to the organizational meeting at Va. Code. § 13.1-623.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The Virginia statutes relating to issuance of stock certificates are located in Va. Code § 13.1-647 and Va. Code § 13.1-648. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

7. Obtain any required local licenses.

See the general section on forming a corporation for details.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Virginia (including corporate officers), you need to apply for a VEC (Virginia Employment Commission) account number. You can do this via the Online Services for Businesses website, which can also register you for other business taxes (if applicable).

Whenever you hire an employee in Virginia, you must inform both the IRS and the State of Virginia. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Virginia New Hire Reporting website.

If you have three or more employees in Virginia, you need to carry workers' compensation insurance. The Virginia Workers' Compensation Commission administers the program.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Virginia's current income tax rate for corporations is 6% of Virginia taxable income.

9. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Virginia

Every year, the State Corporation Commission will mail the corporation's registered agent the Annual Assessment Packet. This packet contains a pre-printed Annual Report form and a notice of annual registration fee assessment. There is no filing fee for the Annual Report. The registration fee assessment depends on the number of shares the corporation is authorized to issue. For corporations authorized to issue 5,000 or fewer shares, the fee is $100. If your corporation is authorized to issue more than 5,000 shares, you should look at the fee schedule on the Annual Corporation Requirements page.

Virginia requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Va. Code § 13.1-770 and Va. Code § 13.1-771.

Va. Code § 13.1-774 requires Virginia corporations to make certain annual financial statements available to shareholders of the corporation upon request.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Virginia. There is no additional paperwork that must be filed with Virginia to obtain "S" status.

Jurisdiction:

Virginia

Subject Area:

Business Formation

Forming a Corporation in Washington

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Washington. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Washington Secretary of State's website and the Department of Licensing website, which have useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

Washington law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply), and may not contain any of the following words or phrases: "Bank," "banking," "banker," "trust," "cooperative," or any combination of the words "industrial" and "loan," or any combination of any two or more of the words "building," "savings," "loan," "home," "association," and "society," or any other words or phrases prohibited by any statute of the state.

Consult Access Washington for information on how to check the availability of your desired business name in Washington.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under Washington law, a corporation must have at least one director.

A director need not be a resident of Washington or a shareholder of the corporation, unless the articles of incorporation or bylaws require these qualifications.

Washington does not set a minimum age requirement for directors.

Either the articles of incorporation or the corporation's bylaws should set the number of directors that will make up the corporation's board of directors.

3. Prepare and file articles of incorporation with the Secretary of State.

The filing fee is $180. The Secretary of State's website has a simple, fill-in-the-blank form for the articles of incorporation. If you would like to file online, you can do so using the Secretary of State's Online Application Forms page. There is a $50 expedited processing fee and a $20 fee for online filing. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

4. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

See the general section on forming a corporation for details. You can find the Washington statute relating to the organizational meeting at Wash. Rev. Code § 23B.02.050.

6. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The Washington statutes relating to issuance of stock certificates are located in Wash. Rev. Code § 23B.06.250 and Wash. Rev. Code § 23B.06.260. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received in cash, property, or services) for each share of stock.

7. File a Business License Application with the Washington Department of Licensing.

Washington uses a single form for many of the steps needed to start a business. This form is called the Business License Application.

Before filing out the Business License Application, get the Business Licensing Guide so that you will fill out the application correctly.

You can file the Business License Application by printing out the form and mailing it, applying online, or by visiting a business licensing office in person. The filing fee is $20, which is a processing fee of $15, plus $5 to register a trade name. If you filed formation papers with the Secretary of State, write the Unified Business Identifier (UBI) number that was given to you on your Business License Application.

When you file the Business License Application, you will receive a state business license and a Unified Business Identifier (UBI) number (if you did not already receive one from the Secretary of State's office).

The Business License Application lets you register a "trade name" for your business, which you need to do if you want to operate your business under a name other than that listed in the certificate of formation.

The Business License Application also lets you create a state employment account, which you need to do if you will have an employee or employees in Washington. You should not set up an employment account unless you plan to employ someone in the next 90 days.

Check your local county or city clerk's office for any additional licensing requirements.

8. File an Initial Annual Report with the Secretary of State.

You need to file an Initial Annual Report within 120 days of filing the articles of incorporation. The filing fee is $10. If you file the articles of incorporation by mail, you will receive the Initial Annual Report form by mail from the state. If you file the articles online, you file the Initial Annual Report through the Online Application Forms page.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

If you have an employee or employees in Washington, you need to set up a state employment account using the Business License Application (discussed above).

Whenever you hire an employee in Washington, you must inform both the IRS and the State of Washington. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Washington New Hire Reporting website.

If you have an employee or employees in Washington, you need to carry workers' compensation insurance. The Washington State Department of Labor & Industry administers the program. Its website has a useful Intro to L&I's Workers' Comp Insurance page.

As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.

Washington corporations must complete the state excise tax return, generally on a monthly or quarterly basis, and pay the business and occupation (B&O) tax. B&O taxes are assessed on gross revenue, regardless of whether the company makes a profit. Generally, if a business has gross revenue of less than $7,000 in a quarter, it will not have to pay B&O taxes that quarter, but it must still complete the excise tax return. The B&O tax rate is determined by type of business activity, with rates between 0.1 percent and 2.0 percent of gross revenue (most services are 1.5%). For more information, contact the Washington Department of Revenue at 1-800-647-7706.

10. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Washington

Washington corporations must file an annual report and license renewal with the Washington Department of Licensing every year after formation. The filing fee is $69, and you can file the report and renewal online.

Washington requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Wash. Rev. Code § 23B.16.010 and Wash. Rev. Code § 23B.16.020.

Wash. Rev. Code § 23B.16.200 requires Washington corporations to make certain annual financial statements available to shareholders within four months of the end of the corporation's fiscal year or before the annual shareholders meeting (whichever is sooner). It also requires the corporation to furnish other financial statements upon request by a shareholder.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Washington. There is no additional paperwork that you must file with Washington to obtain "S" status.

S corporations are subject to the B&O tax (discussed above).

Jurisdiction:

Washington

Subject Area:

Business Formation

Forming a Corporation in the District of Columbia

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in the District of Columbia. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the Department of Consumer and Regulatory Affairs website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.

District of Columbia law requires that a corporation name include the word "corporation," "company," "incorporated," or "limited," or an abbreviation of one of these words. Additionally, your corporation name may not be the same as, or deceptively similar to, the name of any other corporation on file with the Department of Consumer and Regulatory Affairs, and it may not indicate that the corporation is organized under an act of Congress.

Although you are not required to do so, consider registering your business name as a federal and/or state trademark.

2. Recruit and/or appoint a director or directors for the corporation.

Under DC law, a corporation must have at least one director.

Directors do not have to be residents of the District or shareholders of the company, unless the articles so require.

There does not appear to be a minimum age requirement for directors, but incorporators (i.e., those filing the paperwork) must be at least eighteen years old.

3. Prepare and file articles of incorporation with the Department of Consumer and Regulatory Affairs.

The filing fee is $185. The Department of Consumer and Regulatory Affairs website has a sample articles of incorporation for a DC corporation, with instructions. You can file online by registering for the District's online filing system. For general information on corporate articles of incorporation, please see the Articles of Incorporation page.

DC law requires that the articles of incorporations contain a clause stating that the company will not commence business until it has raised $1000 in capital.

DC law requires that the articles of incorporation state the number of directors that will constitute the corporation's board of directors and identify the individual or individuals who will serve as directors until the first annual meeting of shareholders.

4. Raise $1000 in capital.

DC law is unique in requiring a corporation to raise $1000 in capital before commencing business or incurring any debt. This requirement does not stop a corporation or its owners from taking steps necessary to organize the corporation or to obtain subscriptions to or payment for its stock. This requirement does not apply to non-profit corporations, LLCs, and other unincorporated businesses in DC.

5. Create the corporation's bylaws.

There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Department of Consumer and Regulatory Affairs, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

6. Hold an organizational meeting.

After the Department of Consumer and Regulatory affairs issues the corporation a "certificate of incorporation" approving its articles, the initial directors must hold an organizational meeting for the purpose of adopting bylaws, electing officers, and transacting any other necessary business. Minutes of the meeting should be recorded. You can find the DC statute relating to the organizational meeting at D.C. Code Ann. § 29-302.05.

7. Issue stock certificates to the initial owners of the corporation.

See the general section on forming a corporation for details. The DC statute relating to stock certificates is located at D.C. Code Ann. § 29-304.21. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Obtain any required local licenses.

The District of Columbia issues what is known as a Basic Business License (BBL) to new local businesses. The Department of Consumer and Regulatory Affairs website has a helpful Basic Business License Information page to help you determine whether you need a BBL.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.

Register for District of Columbia business taxes using the FR-500 Combined Business Tax Registration service. This service will tell you what taxes you will be responsible for (including income and employment taxes), guide you to what forms you will need to file, and tell you when they must be filed.

Whenever you hire an employee in the District of Columbia, you must inform both the IRS and the District of Columbia. The IRS details all of the necessary steps to complete, including verifying work eligibility and withholding allowances certificates, on its page entitled Hiring Employees. Information on what to do on the District level will be detailed when you register for taxes using the FR-500 Combined Business Tax Registration service.

If you have employees in the District of Columbia, you must carry workers' compensation insurance.

There may be other informational returns that you may have to file annually or semi-annually with both the IRS and the District. For more information, check out the IRS Guide To Information Returns and the DC Business Resource Center's Report Requirement and Deadline Generator.

The District of Columbia's current income tax rate for corporations is 9.975%.

10. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles.

Other Notable Requirements for Maintaining a Corporation in the District of Columbia

DC corporations must file a Two-Year Report with the Department of Consumer and Regulatory Affairs every two years. The filing fee is $250. Note that the first such report is due April 1st of the first year after incorporation, with each subsequent report filed every two years thereafter.

DC law requires certain documents to be kept at a corporation's principal place of business. A list of the required documents is located in D.C. Code Ann. § 29-313.01.

Additional Steps and Information about Forming an S Corporation

An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with the Distrrict of Columbia. There is no additional paperwork that you need to file with DC.

The District of Columbia does not recognize the "S" status of a corporation and subjects S corporations to the same corporate state tax as other corporations. This does not mean, however, that you cannot designate your DC corporation an S corporation for federal tax purposes.

Additional Steps and Information about Forming a Close Corporation

DC law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (thirty-five maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.

The articles of incorporation of a close corporation are different from ordinary articles of incorporation. The Department of Consumer and Regulatory Affairs has a sample articles of incorporation for a DC close corporation. Among other things, close corporation articles must contain:

A heading stating the name of the corporation and that it is a close corporation.

A provision stating that all of the corporation's stock, of all classes, is not to be held by more than thirty-five persons.

A provision stating that all of the corporation's stock is subject to certain transfer restrictions.

A provision stating that the corporation shall make no offering of any of its stock of any class which would constitute a "public offering" within the meaning of the United States Securities Act of 1933 (15 U.S.C. § 77a et seq.).

The articles may also include a provision stating that the corporation will be managed by its shareholders rather than a board of directors pursuant to D.C. Code Ann. § 29-305.42.

Running a close corporation generally requires a shareholders' agreement. This is an agreement among all or most of the corporation's shareholders, in which they agree to the relaxation of various corporate formalities, such as holding frequent shareholder and board meetings.

If you are interested in forming a close corporation, you should contact a lawyer.

Jurisdiction:

District of Columbia

Subject Area:

Business Formation