Forming a Corporation

Here are the general steps you need to follow in order to form an corporation (specifically, a C corporation) in compliance with applicable laws. Make sure to consult your state page for state-specific details.

1. Choose a business name for the corporation and check for availability.

  • As a general matter, the name must (a) contain the words "Corporation," "Incorporated," "Limited," or an abbreviation of one of these words ("Corp.", "Inc.", or "Ltd."); (b) not be the same as that of another corporation on file with the state; and (c) not contain words that suggest an association with the federal government or a restricted type of business, such as "Bank," "Cooperative," "Federal," "National," "United States," or "Reserve."
  • Although you are not required to do so, you should consider registering your business name as a federal and/or state trademark. Please see the Trademark for Business Naming section for details.

2. Recruit and/or appoint a director or directors for the corporation.

  • A corporation's board of directors makes the major strategic and financial decisions for the corporation, including authorizing the issuance of stock and appointing corporate officers. Some states require that directors be named in the articles of incorporation, while others allow the owners/incorporators (those filing the paperwork) to appoint directors at the initial organizational meeting. The minimum number of directors varies based on state law, but generally three directors are required, unless there are fewer than three shareholders, in which case fewer than three directors are permitted. (Note: If a corporation only has one shareholder, all states allow that shareholder to serve as the sole director and officer of the corporation.)

3. Prepare and file articles of incorporation with the appropriate state office, usually the Secretary of State.

  • There will be a filing fee, which generally ranges between $70 and $200 depending on the state, but certain states have higher fees (e.g., Massachusetts ($275) and Texas ($300)). See the state pages on forming a corporation for details on state filing fees.

4. Create the corporation's bylaws.

  • Bylaws set out the details of how the business will be run, who will make what decisions, when decisions will be made, and the like.
  • You are not required to file bylaws with a state office, but you should keep a copy at your principal place a business.

5. Hold an organizational meeting.

  • The owners/incorporators, or the initial directors if named in the articles of incorporation, should hold an initial organizational meeting to (1) appoint directors (if not named in the articles); (2) appoint corporate officers; (3) adopt the bylaws; (4) authorize the issuance of stock; (5) set the corporation's accounting year (fiscal year); (6) adopt a stock certificate form; (7) designate a bank; and (8) select a corporate seal.
  • Someone present at the meeting should record minutes of the meeting, and the minutes should be stored at the corporation's principal place of business.

6. Issue stock certificates to the initial owners of the corporation.

  • A stock certificate is a document that certifies ownership of a specific number of shares in a corporation. Generally, shares are issued to the owners in return for capital contributions (either in cash, property, or services performed), which become the business's original operating capital. A corporation's board of directors sets the price to be paid by shareholders in return for shares.
  • The corporation should record the number of shares issues, to whom they were issued, and the amount paid, in a ledger kept at its principal place of business.
  • Issuing stock potentially implicates federal and state securities laws. Fortunately, if the corporation will issue shares to ten or less people who will actively participate in running the business, it will qualify for exemptions to federal and state securities registration requirements. Complying with federal and state securities laws is complex and burdensome -- you should contact a lawyer for assistance if you contemplate an issuance of stock to more than a few people who will not be involved in the day-to-day affairs of the business.

7. Obtain any required local licenses.

  • As a business doing journalism, you are not required to obtain any federal or state licenses or permits relating to carrying on a particular trade. Most local or city governments, however, require every business to obtain a basic business license, sometimes called a tax registration certificate. You get this license from your city or county. The best way to get information about fees and procedures is to contact your county or city clerk's office or other local government authority. The local chamber of commerce and other small business owners might also be a good resource for information regarding local licenses and/or permits.

8. Determine what tax obligations the corporation has, and take care of any necessary registrations.

  • by submitting the required information online at the IRS website. The EIN is issued immediately once the application information is validated;
  • by telephone at 1-800-829-4933 from 7:00 a.m. to 10:00 p.m. in your local time zone; or
  • The corporation likely will need to obtain a state employer identification number or account for tax purposes. You will also have to report any new hires as you make them. See the State Law: Forming a Corporation section for details on state requirements.
  • You should be aware that, as the owner of a small business, you may be subject to additional federal, state and local taxes and informational filing requirements, such as self-employment taxes and employment tax withholdings and filings. Please see the Tax Obligations of Small Businesses section for details.
  • Corporations pay income taxes on business profits, and a separate tax return on Form 1120 must be filed for the business. Please see the Corporations page on the IRS website for details.

9. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

State Law: Forming a Corporation

 

Choose your state from the list below for state-specific information on forming a corporation:

Forming a Corporation in California

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in California. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the California Secretary of State's website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

  • Your business name may not be the same as, or deceptively similar to, other corporate names on file with the Secretary of State (limited exceptions apply). Additionally, the name may not contain the words "bank," " trust," "trustee," or related words.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under California law, a corporation must have at least three directors, unless there are less than three shareholders. In that case, the number of directors may be equal to or greater than the number of shareholders. For example, if the corporation has only one shareholder, the number of directors may be one or two. If the corporation has two shareholders, the number of directors may be two (or three, which is the normal minimum).
  • California does not set forth a minimum age or residency requirement for directors.
  • Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors.

3. Prepare and file articles of incorporation with the Secretary of State.

4. Create the corporation's bylaws.

  • California law requires a corporation to create bylaws. There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. File a Statement of Information with the Secretary of State.

  • The filing fee is $25. The Secretary of State's website has a simple, fill-in-the-blank form for the Statement of Information. Instructions are included. It must be filed within 90 days of filing the articles of incorporation.

6. Hold an organizational meeting.

7. Issue stock certificates to the initial owners of the corporation.

  • See the general section on Forming a Corporation for details. You can find the California statute relating to issuance of stock certificates at Cal. Corp. Code § 416. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • If you will be paying at least $100 to an employee or employees in a quarter (this includes corporate officers), you are subject to California employment taxes and must register for a California employer account number within 15 days of paying that $100. You can register for employment taxes and get your account number online using the Employment Development Department's website. These taxes must be paid quarterly. For more information on being an employer, including tax information, see the California Employer's Guide.
  • California imposes an $800 minimum franchise tax on corporations doing business in the state. This minimum tax is separate from any income, self-employment, or payroll tax. For many, this $800 minimum tax could be a significant impediment to forming a corporation in California, especially if you have little or no expected income from your online publishing activities.
  • California's current income tax rate for corporations is 8.84%.

9. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in California

  • Cal. Corp. Code § 1501 (scroll down) states that a corporation must send an annual report to shareholders within 120 days of the end of its fiscal year. This requirement does not apply, however, if the corporation has less than 100 shareholders and its bylaws expressly waive this requirement.

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with California. There is no additional paperwork that you need to file with California.
  • California does not recognize "S" status in the same way the IRS does. California taxes the corporate profits of an S corporation before distribution to shareholders at a rate of 1.5% (as opposed to 8.84% for C corporations).
  • While the corporate tax rate for S corporations is lower than that for C corporations, the $800 minimum franchise tax still applies.

Additional Steps and Information about Forming a Close Corporation

  • California law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (thirty-five maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.
  • The articles of incorporation of a close corporation are different from ordinary articles of incorporation. The Secretary of State's website has a sample articles of incorporation for a close corporation. Among other things, close corporation articles must contain:
  • a statement that all the corporation's issued shares of all classes shall be held by not more than a specified number of persons, not exceeding thirty-five; and
  • this statement: "This corporation is a close corporation."
  • Running a close corporation generally requires a shareholders' agreement. This is an agreement among all the corporation's shareholders, in which they agree to the relaxation of various corporate formalities, such as holding frequent shareholder and board meetings. If you are interested in forming a close corporation, you should contact a lawyer.

Forming a Corporation in Florida

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Florida. You should also read the general section on forming a corporation for information applicable in any state. Additionally, you should familiarize yourself with the Florida Department of State, Division of Corporations website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Florida law, a corporation must have at least one director.

  • Directors must be at least eighteen years old.

  • Directors need not be residents of Florida or shareholders of the corporation, unless the articles of incorporation so require.

  • Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may -- but need not -- be named in the articles.

3. Prepare and file articles of incorporation with the Florida Department of State, Corporations Division.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Division of Corporations, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

  • See the General: Forming a Corporation section for details. The Florida statute relating to issuance of stock certificates is located at Fla. Stat. ch. 607.0625. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

9. Open a Bank Account for Your Business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Florida

  • Florida corporations must file an Annual Report with the Division of Corporations one year after their date of formation and every year thereafter. The filing fee is $150.

  • Florida requires certain documents to be kept at a corporation's principal place of business. A list of the required documents is located in Fla. Stat. ch. 607.1601 and Fla. Stat. ch. 607.1602.

  • Fla. Stat. ch. 607.1620 states that a corporation must send certain financial statements to shareholders within 120 days of the end of its fiscal year, unless shareholders vote to waive this requirement.

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.

  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Florida.

  • No further paperwork needs to be filed with Florida in order to achieve "S" status, but in the corporation's first year as an S corporation it must file the informational portion of Form F-1120 (the Florida corporation income tax return). After the first year, this filing is only required if the company has federal taxable income.

  • Florida does not collect any personal income tax, and therefore S corporations are effectively not taxed by the state.

Forming a Corporation in Georgia

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Georgia. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Georgia Secretary of State's website and the First Stop Business Guide, which contain useful information and resources.

1. Choose a business name for the corporation and check for availability.

  • Georgia law requires that a corporation name include the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name must be distinguishable from other names on file with the state, and it may not contain anything which, in the reasonable judgment of the Secretary of State, is obscene. It may not exceed 80 characters, including spaces and punctuation.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Georgia law, a corporation must have at least one director.
  • Directors must be at least eighteen years old.
  • Directors need not be residents of Florida or shareholders of the corporation, unless the articles of incorporation so require.
  • Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may -- but need not -- be named in the articles.

3. Prepare and file articles of incorporation with the Secretary of State.

  • The articles of incorporation must be accompanied by Transmittal Form 227, which certifies to the state that you are filing articles and will fulfill the publishing requirement explained in the next step.

4. Publish a notice of intent to incorporate in a local newspaper.

5. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation should keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

6. Hold an organizational meeting.

  • See the general section on Forming a Corporation for details. You can find the Georgia statute relating to the organizational meeting at Ga. Code Ann. § 14-2-205 (link is to entire code; click through to Title 14, Chapter 2, Article 2 and then locate the specific provision).

7. Issue stock certificates to the initial owners of the corporation.

  • See the general section on Forming a Corporation for details. The Georgia statute relating to issuance of stock certificates is located at Ga. Code Ann. § 14-2-625 (link is to entire code; click through to Title 14, Chapter 2, Article 6 and then locate the specific provision). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Obtain any required local licenses.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • Whenever you hire an employee in Georgia, you must inform both the IRS and the State of Georgia. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Georgia New Hire Reporting Website.
  • As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • Georgia's current corporate income tax rate is 6% of net income attributable to business done in Georgia. In addition, corporations formed in Georgia are subject to a net worth tax. The minimum net worth tax is $10 for a net worth less than $10,001. The maximum is $5,000 for a net worth in excess of $22 million. The net worth tax table can be found in the IT-611 Booklet under "Net Worth Tax Table."

10. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Georgia

  • Georgia requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Ga. Code Ann. §§ 14-2-1601 and 14-2-1602 (link is to entire code; click through to Title 14, Chapter 2, Article 16, Part 1, and then locate the specific provisions).
  • Ga. Code Ann. § 14-2-1620 (link is to entire code; click through to Title 14, Chapter 2, Article 16, Part 2, and then locate the specific provision) states that a corporation must send certain financial statements to shareholders within four months of the end of its fiscal year and before the annual meeting of shareholders (if the meeting is less than four months after the end of the fiscal year).

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Georgia. There is no additional paperwork that you need to file with Georgia in order to obtain "S" status.
  • If the corporation has non-resident shareholders, however, every year they must file Form 600S-CA, agreeing to pay Georgia income tax on their proportionate part of the corporation's Georgia taxable income.
  • Even if your S corporation has no taxable income, you must still file a Georgia corporate income tax return on Form 600-S every year.

Additional Steps and Information About Forming a Close Corporation

  • Georgia law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (fifty maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.
  • In Georgia, the articles of incorporation of a close corporation must contain a statement that the corporation is "a statutory close corporation." The articles (or bylaws or a shareholders' agreement) may include a provision stating that the corporation will be managed by its shareholders rather than a board of directors pursuant to Ga. Code Ann. § 14-2-922 (link is to entire code; click through to Title 14, Chapter 2, Article 9, and then locate the specific provision). If you are interested in forming a close corporation, you should contact a lawyer.

Forming a Corporation in Illinois

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Illinois. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Illinois Secretary of State's website, its Step-By-Step Guide to Starting a Business in Illinois, and its Guide to Organizing Domestic Corporations, all of which contain valuable resources and information.

1. Choose a business name for the corporation and check for availability.

  • Illinois law requires that a corporation name contain the word "corporation," "company," "incorporated," or "limited," or an abbreviation of one of such words. Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State. Other more obscure limitations apply -- see 805 Ill. Comp. Stat. 5/4.05 for details.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Illinois law, a corporation must have at least one director.
  • There is no minimum age requirement for directors, but incorporators (i.e., those who file the paperwork) must be at least eighteen years old.
  • Directors need not be residents of Illinois or shareholders of the corporation, unless the articles of incorporation so require.
  • The articles of incorporation may set forth the number of directors that will constitute the corporation's board of directors and identify the initial director or directors by name and address, but this is not required. If the number of directors is not set in the articles, it should be set in the bylaws.

3. Prepare and file articles of incorporation with the Secretary of State.

4. Record the certificate of incorporation and articles with the Recorder of Deeds.

  • After you file articles of incorporation, the Secretary of State will send you a "certificate of incorporation," which indicates that the state has accepted your articles. Within fifteen days of receiving this certificate, you must record both it and your articles of incorporation with the Office of the Recorder of Deeds in the county where your office is located.

5. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

6. Hold an organizational meeting.

7. Issue stock certificates to the initial owners of the corporation.

  • See the general section on Forming a Corporation for details. The Illinois statute relating to issuance of stock certificates is located at 805 Ill. Comp. Stat. 5/6.35 (scroll down). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

8. Obtain any required local licenses.

9. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • If you have one or more employees in Illinois, you must carry workers' compensation insurance. You may choose to obtain workers' compensation insurance for yourself, but you do not need to. (If you have a workers' compensation policy for your employees, you must contact your insurance company if you DO NOT want to be covered.)
  • As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • Illinois's corporate income tax rate is 4.8% plus a 2.5% personal property replacement tax (7.3% total).
  • Illinois also imposes a franchise tax on corporations. The tax is based on the corporation’s paid-in capital in Illinois. The initial franchise tax rate is 0.15% of paid-in capital in Illinois, and the minimum payment is $25. After a corporation’s first year, the franchise tax is due annually at a rate of .10%, again with a minimum of $25.00.

10. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Illinois

  • Illinois requires certain documents to be kept at a corporation's principal place of business. The required documents are described in 805 Ill. Comp. Stat. 5/7.75 (scroll down).

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Illinois. There is no additional paperwork that you need to file in Illinois.
  • Illinois does not recognize "S" status in the same way the federal government does. Illinois imposes personal property replacement tax on the corporate profits of an S corporation at a rate of 1.5% (as opposed to a total of 7.3% for C corporations). Here is the Small Business Corporation Replacement Tax Return.

Additional Steps and Information about Forming a Close Corporation

  • Illinois law has provisions relating to what is known as a "close corporation" -- a classification for a corporation with a small number of shareholders (thirty-five maximum) that does not issue stock to the general public. In general, running a close corporation permits a less formal management style under the auspices of a shareholders' agreement. Please see the Close Corporation page for details.
  • Running a close corporation generally requires a shareholders' agreement. This is an agreement among all the corporation's shareholders, in which they agree to the relaxation of various corporate formalities, such as holding frequent shareholder and board meetings. If you are interested in forming a close corporation, you should contact a lawyer.

Forming a Corporation in Indiana

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Indiana. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Indiana Secretary of State's website, which has extremely useful information and resources.

1. Choose a business name for the corporation and check for availability.

  • Indiana law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name must be distinguishable from other names on file with the Secretary of State (limited exceptions apply).

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Indiana law, a corporation must have at least one director.
  • There is no minimum age requirement.
  • Directors need not be residents of Indiana or shareholders of the corporation, unless the articles of incorporation so require.
  • Either the articles of incorporation or the corporation's bylaws must state the number of directors that will constitute the corporation's board of directors. The initial director or directors of the corporation may be named in the articles, but this is not required.

3. Prepare and file articles of incorporation with the Secretary of State.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

  • See the Forming a Corporation section for details. The Indiana statutes relating to issuance of stock certificates are located in Chapter 26 of Article 1 of Title 23 of the Indiana Code. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • Whenever you hire an employee in Indiana, you must inform both the IRS and the State of Indiana. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information about reporting new hires at the Indiana New Hire Reporting Center website.
  • As a small business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • Indiana's current corporate income tax rate is 8.5% of gross income.

9. Open a Bank Account for Your Business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Indiana

  • Indiana requires certain documents to be kept at a corporation's principal place of business. The required documents are described in Chapter 52 of Article 1 of Title 23 of the Indiana Code.

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Indiana. There is no additional paperwork that must be filed with Indiana to obtain "S" status.
  • If the corporation has nonresident shareholders, you must withhold income tax at a rate of 3.4% on distributions to them. You can find instructions for how to do this withholding on page 3 of the S Corporation Income Tax Booklet. Exception: Some states have entered into a "reverse-credit agreement" with Indiana, which means that if a nonresident shareholder resides in Arizona, California, Oregon, or the District of Columbia, income tax does not need to be withheld.

Forming a Corporation in Massachusetts

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Massachusetts. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Secretary of the Commonwealth, Corporations Division website, which has helpful resources and information.

1. Choose a business name for the corporation and check for availability.

  • Massachusetts law requires that a corporation name contain the word "corporation," "incorporated," "company," or "limited" or the abbreviation "corp.," "inc.," or "ltd.," or words or abbreviations of like import in another language. Additionally, your corporation name may not be the same as, or deceptively similar to, other names on file with the Secretary of the Commonwealth (limited exceptions apply).

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Massachusetts law, a corporation must have at least three directors, unless there are less than three shareholders. In that case, the number of directors may be equal to or greater than the number of shareholders. For example, if the corporation has only one shareholder, the number of directors may be one or two. If the corporation has two shareholders, the number of directors may be two (or three, which is the normal minimum). Regardless of the number of shareholders, the articles of organization may provide that the corporation's board of directors will have less than three directors.
  • There is no minimum age requirement for directors.
  • Directors need not be residents of Massachusetts or shareholders of the corporation, unless the articles of organization or bylaws so require.

3. Prepare and file articles of organization with the Secretary of the Commonwealth.

  • The form for the articles of organization asks for the names and addresses of the individual or individuals who will serve as the corporation's initial director(s), president, treasurer, and secretary of the corporation. If there is only one shareholder, one person can fill all of these roles. This information does not become a permanent part of the corporation's articles.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the Secretary of State, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.
  • Even if you listed the names and addresses of the corporation's initial directors in the form for the articles of organization (see above), you should set forth in the bylaws the number of directors that will constitute the corporation's board of directors.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

  • See the Forming a Corporation section for details. The Massachusetts statute relating to issuance of stock certificates is located at Mass. Gen. Laws ch. 156D, § 6.25. Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • Whenever you hire an employee in Massachusetts, you must inform both the IRS and the Commonwealth of Massachusetts. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Massachusetts New Hire Reporting Center website.
  • As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • Massachusetts's current tax rates for corporations are 9.5% of gross income and .26% of net worth or tangible property (if any). Importantly, the combined minimum tax is $456, which is is separate from any personal income, self-employment, or payroll taxes. Sole proprietors, partnerships, and LLCs are not subject to this minimum tax.

9. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Massachusetts

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Massachusetts. There is no additional paperwork that must be filed with Massachusetts to obtain "S" status.
  • S Corportions must file Tax Form 355S with the Massachusetts Department of Revenue every year.
  • While S corporation do not pay state income tax on corporate profits (unless gross receipts exceed $6,000,000), they are subject to the .26% net worth tax and the $456 minimum tax.

Forming a Corporation in Michigan

Steps to Create a Corporation

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in Michigan. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the Michigan Department of Labor & Economic Growth, Bureau of Commercial Services website, which has useful resources, but is difficult to navigate.

1. Choose a business name for the corporation and check for availability.

  • Michigan law requires that a corporation name contain the word "corporation," "company," "incorporated," or "limited" or one of the following abbreviations: "corp.," "co.," "inc.," or "ltd." Additionally, your corporation name must be distinguishable from other names on file with the state.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under Michigan law, a corporation must have at least one director.
  • There is no minimum age requirement for directors.
  • Directors need not be residents of Michigan or shareholders of the corporation, unless the articles of incorporation or bylaws so require.
  • The number of directors that will constitute the corporation's board of directors should be set forth in the bylaws.

3. Prepare and file articles of incorporation with the Department of Labor & Economic Growth, Bureau of Commercial Services, Corporation Division.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Bylaws page.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • Whenever you hire an employee in Michigan, you must inform both the IRS and the State of Michigan. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Michigan New Hire Reporting Center website.
  • As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
  • As of January 1, 2008, a new business tax regime -- called the Michigan Business Tax -- takes effect in Michigan. Under it, qualifying small businesses in Michigan will pay a tax equal to 1.8% of adjusted business income. Probably all small online publishing businesses will qualify -- the law requires that officers of the corporation not be paid more than $160,000, gross receipts not exceed $18 million, and business income not exceed $1.3 million. For more information on the Michigan Business Tax, see the Michigan Business Tax FAQ on the Michigan Department of Treasury website.

9. Open a bank account for your business.

  • It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your corporation. You will probably need a Tax ID number (EIN), a copy of the articles of incorporation, and a resolution identifying authorized signers if those names are not listed in the articles. Here is one example of the documentation that banks ask for.

Other Notable Requirements for Maintaining a Corporation in Michigan

  • Michigan corporations must file an Annual Report every year with the Department of Labor & Economic Growth before May 15. The filing fee is $25, and you can file the form online via the FILEonline Service.

Additional Steps and Information about Forming an S Corporation

  • An S corporation has the same basic organizational structure as a regular corporation, but some of the tax advantages of a partnership or LLC. An S corporation pays no federal income tax, except for tax on certain capital gains and passive income. Instead, the corporation's profits and losses "pass through" to shareholders, and profits are taxed at individual rates on each shareholder's Form 1040. Certain requirements and additional obligations apply -- please see the S Corporation page for details.
  • To form an S corporation, designate "S" status with IRS via Form 2553 within 2 months and 15 days of filing your articles of incorporation with Michigan. There is no additional paperwork that must be filed with Michigan to obtain "S" status.

Forming a Corporation in New Jersey

Here is an outline of the steps you need to follow in order to form a corporation (specifically, a "C corporation") in New Jersey. You should also read the general section on forming a corporation for information that is applicable in any state. Additionally, you should familiarize yourself with the New Jersey Division of Revenue website, which has useful information and resources.

1. Choose a business name for the corporation and check for availability.

  • New Jersey law requires that a corporation name contain the word "corporation," "company," "incorporated," or an abbreviation of one of those words, or abbreviations of like import in other languages. Additionally, your corporation name must be distinguishable from other names on file with the state.
  • For information about checking the availability of your desired business name in New Jersey, see the Check Business Name Availability page on the Division of Revenue's website.

2. Recruit and/or appoint a director or directors for the corporation.

  • Under New Jersey law, a corporation must have at least one director.
  • Directors must be at least eighteen years of age.
  • Directors need not be residents of New Jersey or shareholders of the corporation, unless the certificate of incorporation or the bylaws so require.
  • The certificate of incorporation must set forth the number of directors constituting the first board and the names and addresses of the persons who are to serve as directors.

3. Prepare and file a certificate of incorporation with the Division of Revenue.

4. Create the corporation's bylaws.

  • There is no set criteria for the content of bylaws, but they typically set forth internal rules and procedures for the corporation, touching on issues like the existence and responsibilities of corporate offices, the size of the board of directors and the manner and term of their election, how and when board and shareholder meetings will be held, who may call meetings, and how the board of directors will function. You are not required to file bylaws with the state, but the corporation must keep a copy at its principal place a business. For general information on corporate bylaws, please see the Corporate Bylaws page.

5. Hold an organizational meeting.

6. Issue stock certificates to the initial owners of the corporation.

  • See the general section on forming a corporation for details. The New Jersey statutes relating to issuance of stock certificates are located in N.J. Stat § 14A:7-11 (link is to the entire code, you need to click through to Title 14A, Article 7, and then locate the specific provision). Unless the articles of incorporation state otherwise, the board of directors has the authority to set the "consideration" (i.e., the amount to be received) for each share of stock.

7. Obtain any required local licenses.

8. Determine what tax and other regulatory obligations the corporation has, and take care of any necessary registrations.

  • Request an Employer Identification Number (EIN) from the IRS. This can be done via its online application. There is no filing fee.
  • All new businesses must register with the Division of Revenue using the Business Registration Application. Upon registering, you will receive the forms, returns, instructions, and other information needed to comply with New Jersey law.
  • Whenever you hire an employee in New Jersey, you must inform both the IRS and the State of New Jersey. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the