A corporation in the making!

If you have decided that your business is qualified for a more complex operation and that you have reach the limited liability and the stable tax structure, then the next step is actually forming the corporation. The law of the state in which you will incorporate your business will be applicable and they will dictate exactly what you need to do, but following the same steps in incorporation. The following outlines are the steps you'll need to take in order to for a corporation.

The Articles of Incorporation lays down the basic information about the corporation. This comprise of the name of the corporation, the purpose of the business, the number and type of shares authorized, the names of shareholders, the names and addresses of the initial officers and directors, the name of the authorized agent, and the name of the incorporator. It is basically filed with the State, usually the Secretary of State's office.

Bylaws are also vital requirements in the making of a corporation. These are the document that regulates how the corporation will be run. It will cover things such as how often and when shareholders' and board of directors' held its meetings. It will provide for how much notice should be given prior to a meeting and in what manner notice will be given. The Bylaws will also set forth the rules regarding how many shareholders or directors are needed to establish a quorum and how much of a majority vote will be required to take certain actions. The bylaws will also provide for the mechanism by which the bylaws may be changed. For example, bylaws may be changed with the approval of a two-thirds majority of the shareholders just in case.

The Minutes of the first meeting of the Board of Directors should also be prepared in advance. They will cover all of the business that needs to be conducted at that first meeting. The bylaws of the corporation will be adopted. Shares in the corporation will be issued. Authority will be granted to open a bank account and to conduct business in the name of the corporation.

These are just the basic steps to forming a corporation. Depending on how you want ownership of your business to be structured, there are still other steps you should take. You may want stock transfer agreements that set out who can own stock in the corporation and how and under what circumstances stock can be sold. You may also want shareholder voting agreements that specify how certain shares of stock will be voted at shareholder meetings. These types of arrangements should be made concurrently with the formation of the corporation. An attorney who practices business law can help you with the preparation of all of these documents.