How To Set Up a Corporation

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 15, 2021

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A corporation is an artificial legal entity, typically chartered by a state, generally formed to operate a business. Thus, each state’s code of laws have a general corporation law or business corporation law that allows virtually anyone to obtain a charter to conduct most businesses. Certain types of corporations, such as banks, insurance companies, and public utilities often have to be formed either by an act of the legislature or under special laws. 

The actual formal mechanics of creating a corporation is known as incorporation. Each state has its own set of laws governing the process of incorporating. The process involves completing and filing a Certificate of Incorporation or Articles of Incorporation and paying a filing fee. The specific contents of the Articles of Incorporation vary with each state’s incorporation laws, but there are common key features: the corporation’s name, the number of shares authorized, the names and addresses of the incorporator(s), and the address of the registered office and agent for service of process.

In terms of the actual filing, some people follow a “do it yourself” approach using (1) interactive software programs that automate the process, (2) tear-out forms available in many published guides to incorporating, or (3) fill-in-the blank forms that may be available from the State.  Many use a corporate service compoany to create the corporation.  Wise ones rely on an attorney to set up the corporation for them.

Corporate existence starts when the Articles of Incorporation are filed with the state office that handles incorporations (usually the Secretary of State or Corporation Commissioner), along with the required filing fees. Accelerated incorporations or same day filings are available in some states.

In addition to the standard corporation, two relatively new forms of entities known as a limited liability company (LLC) and limited liability partnership (LLP) offer many of the same benefits as the traditional corporation, plus some unique advantages.

Forming the corporation is just a small part of the total process of setting up a business and making sure what you are setting up makes sense for you.  Furthermore, once the corporation is set up, it becomes necessary to adopt by-laws and resolutions and a whole long paper trail to assure you the protections and benefits you are seeking by operating in corporate form.

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