How Does a Person Become Incorporated?

By Elizabeth Rayne

A corporation is an independent legal entity owned by shareholders, and may be incorporated by an individual. The shareholders are not personally liable for the corporation, which will continue to exist even if the shareholders change or pass away. State law regulates the formation of corporations and varies by state; however, there are some similarities.

Choice of Venue

In forming a new business, you must decide where you would like to incorporate. While many businesses simply incorporate in the state where the business is physically located, others incorporate in a different state for a variety of reasons including taxation and local court procedure. In order to incorporate in most states, you must have a registered agent who resides in the state and will be responsible for accepting legal documents on behalf of the corporation.

Applicable Law

Each state has unique laws for incorporation, and the steps for incorporating will vary depending on which state you select. Generally, the state assigns oversight to a state agency that acts as a business registrar. In most states, the secretary of state's office approves and monitors corporations. You should contact the business registration office to determine the specific steps for incorporation.

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Articles of Incorporation

In most states, a business incorporates by filing articles of incorporation. Generally, this process begins by filling out a form with the corporate name and address, name and address of the registered agent and each incorporator, and the number of shares the corporation will issue. The articles may also include the purpose of the corporation. Generally, the articles must be signed by an incorporator and then submitted to the secretary of state with the appropriate fee. An online legal document preparer can help. After the articles are approved by the state, the business is incorporated.

Standard Requirements

Many states have similar standards for new corporations. Typically, state law requires an incorporated business to select and register a business name that is not already in use. Additionally, corporations usually must have at least one incorporator who signs the incorporating documents, and a registered agent who accepts legal documents on behalf of the business. Many states also require corporations to have a board of directors, composed of at least one member, who oversees the affairs of the corporation. Some states also require the corporation to issue stock certificates to the initial shareholders as part of the registration process.

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References

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Definition of Incorporated Business

In launching a new business, one of the most important decisions you must make is the legal structure your new company will take. Each structure has its advantages and drawbacks. However, companies that operate on the global market share a common legal structure -- they are incorporated. Consult with an attorney who specializes in business law with specific questions about forming a company.

How to Cancel an Incorporation

When a business incorporates, it becomes a distinct legal entity. The corporation’s liabilities are its own; its shareholders are generally not personally responsible for those obligations. The incorporation is also required to file its own tax returns. Due to its legal independence, cancelling corporate status requires filing documents with a number of organizations. Businesses incorporate under state law, so the specific steps for dissolving the organization will vary. Check the laws of the state where the business is incorporated for the exact process your corporation will have to follow.

How to Setup Directors in an S Corp in California

An S corporation, similar in many ways to a standard C corporation, elects to be taxed as a pass-through entity by the Internal Revenue Service rather than to pay corporate income tax. When you file articles of incorporation in California, you must also file Form 2553 with the IRS to confirm the S corp election. Corporate statutes, in the state where a business is formed, govern S corporation management. As such, California corporate law sets forth the rules for setting up a board of directors.

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