preparing to launch
Incorporating Your Business: What You Need To Know
When filing for incorporation, there is a substantial amount of paperwork that you’ll need to complete in order to successfully go through the process. While sole proprietorships and general partnerships are free to conduct business with little administrative effort, this is not true for any formal corporate structure, whether it be an LLC, C corp, or S corp. You can use this document as a checklist to make sure that you have all of the necessary information gathered before starting the filing process.
What are the Articles of Incorporation?
The first step is filing a document called “Articles of Incorporation” (referred to in some states as a Certificate of Incorporation). This document is filed at the state level, with the state you choose to incorporate in. You should note that this does not always have to be the state that you live in or that houses your business. Some business owners choose to incorporate in a different state due to different regulations that impact their business. (See our article on Incorporating in a Different State for more info). Filing your Articles of Incorporation creates a document that exists in the public record and provides all of the pertinent information about your company.
Preparing to file
The following ten items will give you a great idea as to the information you will be asked to provide. Gathering this information before you begin filling out your incorporation paperwork is the most efficient way to draft your business’s Articles of Incorporation.
The exact details that you need to address may vary from state to state, but this list will give you a very solid starting point.
- Your company name — While it might seem obvious (and a bit unnecessary) to note that you’re required to provide a name for your company, there is actually a bit more involved in naming a corporation than many would expect. You will need to find a name that is unique and not already in use in your state of incorporation. Databases exist that list registered business names. You can sort through that yourself or hire a company that has access to all databases to run the search for you. Final name approval is ultimately up to the state. You will also be required to choose and include a term from a set of words that help individuals know that you are a corporation, such as “Company”, “Inc.”, or “Corporation”.
- Your business’s mission — You’re required to provide a brief statement that explains what products or services your company will provide to its clients. Some states ask for very general statements, while other can demand more in-depth explanations of your intended offerings.
- The name of your registered agent — A registered agent is the individual who will be responsible for receiving, and typically sending, all documents and necessary communications with government agencies. The agent must be available at the address of incorporation during all business hours (9:00am to 5:00pm, Monday through Friday). It is possible to hire a third party service to ensure that this role is being filled appropriately and professionally.
- The name of who is preparing your documents — During the incorporation process, you will also be required to disclose the name and contact information of the individual taking care of your filing documents.
- How many shares of stock you wish to authorize — This is the point where filing your company’s Articles of Incorporation can get a bit complicated, so it is typically advised that you speak with a professional regarding any stock-related step. You will be required to disclose the number of ownership shares that you wish establish at the start of your business. Some states impose certain taxes depending on how many shares you plan to authorize, so be sure to take that into account.
- Your proposed stock par value — The par value of a stock is a formality designed to establish a share’s minimum stated value. This value is typically less than $1. The true value of a stock will either be determined by the book value of your company, or what it is being publicly traded for (depending on whether or not your corporation will be public or private).
- Special stock considerations — This is another aspect of the incorporation process that typically is best handled by a filing professional or business law attorney. If you plan to authorize both common and preferred stock, you will need to make note of that here, as well as define the special privileges that the preferred stock will provide its holders.
- Director information — Most states will require you to provide the names and contact information for your company’s initial set of directors. These directors are responsible for making many important business decisions, and eventually will be chosen by election and voted on by your company’s shareholders.
- Leadership structure — In addition to providing the names of your initial directors, you will also need to list your initial set of officers as well (e.g. President, VP, CFO, Treasurer) along with their addresses. These officers will be in charge of overseeing and managing your business’s daily operations.
- Your business’s address — Most states, but not all, will require you to have a legal address on file for your company. However, your registered agent’s information will typically be used, should the government need to contact your organization.
Swyft can help!
Whichever incorporation structure you choose, remember that you have a resource to help you file correctly. The experienced professionals at Swyft can talk with you about your specific situation. Contact us today!