How to Form a C Corp
You probably don’t need to register your business as a Corporation.
But there’s one big reason why you might want to form one: investors.
You can issue preferred stock in exchange for a financial investment.
Here’s the process to start a Corporation…
1. Pick an Available Name
It’s so important to pick a company name that is available and isn’t trademarked.
A trademark is the exclusive right to use a company name.
The company that owns the trademark for a name is the only one who can use it. If you use a trademarked name, you could be sued or forced to rebrand.
It doesn’t matter if the Corporation name is available.
You’ll want to run a trademark search to make sure your name is available. Otherwise, you might be registering a company name that you can’t legally use.
Read More: The Smart Way to Name Your Company
2. Register with the State
It's pretty simple.
You'll have to register the Corporation with your state.
First, check your state filing fees and minimum taxes to make sure it works.
It can be expensive in states like California or be tricky in states like New York.
You can typically file online at your state corporations’ website.
You’ll likely need:
This is your company name, followed by Incorporated, Inc., Corporation, or Corp.
For example, "Sprout, Inc."
Names of Board Members
You may have to list the names of the board members.
It's likely okay if they’re one person. Although some states require three people.
This is someone to accept your mail.
It can be you or you can hire registered agent service.
It has to be in the state where you're registering.
It can be your personal address. But know that it will be public.
It can be a registered agent service or a mailbox service. It cannot be a PO Box.
Typically, the Corporation will want a "perpetual" duration.
There are circumstances where you may want it limited to a specific period.
Typically, the purpose will be "all lawful purposes".
There are circumstances where you may want it to be limited, like an event.
Number of Shares
You'll list the total number of shares that your company is authorized to issue.
10,000 is a common number.
3. Look for Additional Filings
Read the confirmation paperwork to see if there are additional filings.
For example, in California, you need to file a Statement of Information afterward.
In some states, you need to publish your information in a local newspaper. You may also need to file your bylaws with the state.
4. Check your Renewal
Read your confirmation paperwork to see when you need to renew.
You’ll want to keep up with renewals to avoid late fees and cancellation.
5. Create Bylaws
You’ll need bylaws to attract investors.
This document spells out how your company works. It covers how you issue equity, how shareholders vote, and how the board makes decisions.
6. Appoint Directors
A board of directors makes the policy and financial decisions for the company. You’ll appoint a board of directors and have them formally accept the role.
7. Hold a Board Meeting
At the first meeting of the board of directors, you’ll adopt the bylaws, elect officers, and discuss the plan for moving forward. After the meeting, minutes should be created and filed in the nonprofit's records.
8. Issue Stock Certificates
You’re official! You’ll probably need to issue stock certificates to all shareholders.