How to Form a Corporation

To form your own corporation, you must take these essential steps.

If you've sorted through the many types of business structures and decided to create a corporation, you're facing a list of important -- but manageable -- tasks. Here's what you must do:

1. Choose an available business name that complies with your state's corporation rules.
2. Appoint the initial directors of your corporation.
3. File formal paperwork, usually called "articles of incorporation," and pay a filing fee that ranges from $100 to $800, depending on the state where you incorporate.
4. Create corporate "bylaws," which lay out the operating rules for your corporation.
5. Hold the first meeting of the board of directors.
6. Issue stock certificates to the initial owners (shareholders) of the corporation.
7. Obtain any licenses and permits that are required for your business.

Choosing a Corporate Name

The name of your corporation must comply with the rules of your state's corporation division. You should contact your state's office for specific rules, but the following guidelines usually apply:

• The name cannot be the same as the name of another corporation on file with the corporations office.
• The name must end with a corporate designator, such as "Corporation," "Incorporated," "Limited," or an abbreviation of one of these words (Corp., Inc., or Ltd.).
• The name cannot contain certain words that suggest an association with the federal government or restricted type of business, such as Bank, Cooperative, Federal, National, United States, or Reserve.

Your state's corporations office can tell you how to find out whether your proposed name is available for your use. Often, for a small fee, you can reserve your corporate name for a short period of time until you file your articles of incorporation.

Besides following your state's corporate naming rules, you must make sure your name won't violate another company's trademark. For information about trademark law and general advice on picking the right business name, see Pick a Winning Name for Your Business.

Once you've found a legal and available name, you usually don't need to file the name of your business with your state. When you file your articles of incorporation, your business name will be automatically registered.

However, if you will sell your products or services under a different name, you must file a "fictitious" or "assumed" name statement with the state or county where your business is headquartered. For more information, see Registering Your Business Name.

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