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.