What are the requirements for starting an Inc?

Starting a corporation, often referred to as “Inc.” or “Corp.,” in the United States involves several legal and state-specific steps. The process can vary slightly depending on the state, but the general requirements are as follows:

1. Choose a Corporate Name

Unique Name: The corporation’s name must be unique within the state where it is incorporated. The name must not be confusingly similar to any existing business entities in that state.
Corporate Designation: The name must include a designation such as “Corporation,” “Incorporated,” “Company,” “Corp.,” or “Inc.” to indicate its corporate status.
Restricted Words: Certain words may be restricted or require additional documentation or licensing, such as “bank,” “insurance,” or “trust.”

2. Appoint Directors

Board of Directors: The corporation must appoint at least one director (the number can vary depending on state requirements) who will oversee the management of the corporation. Directors are responsible for making major business decisions and overseeing the officers who manage the day-to-day operations.
Director Requirements: The directors must meet any age and residency requirements specified by the state, although most states allow for flexibility in these areas.

3. File Articles of Incorporation

Articles of Incorporation: This is the primary legal document required to form a corporation. It is filed with the state’s business filing office, typically the Secretary of State.
Contents: The Articles of Incorporation usually include the corporation’s name, principal address, the name and address of the registered agent, the purpose of the corporation, the number of authorized shares of stock, the names and addresses of the incorporators, and information about the initial board of directors.
Filing Fee: There is a filing fee for submitting the Articles of Incorporation, which varies by state but typically ranges from $50 to $500 or more.

4. Appoint a Registered Agent

Registered Agent: The corporation must appoint a registered agent in the state of incorporation. The registered agent is responsible for receiving legal documents and official government notices on behalf of the corporation.
Requirements: The registered agent must have a physical street address in the state (not a P.O. Box) and be available during normal business hours.

5. Create Corporate Bylaws

Bylaws: Corporate bylaws are internal rules that govern the management and operations of the corporation. While not filed with the state, bylaws are essential for setting out the rights and responsibilities of shareholders, directors, and officers.
Contents: Bylaws typically include provisions on how the board of directors is structured, how meetings are conducted, the roles and duties of officers, how stock is issued and transferred, and how conflicts of interest are handled.
State Requirements: Some states may require a corporation to adopt bylaws, while others do not. However, bylaws are crucial for maintaining proper corporate governance and ensuring that the corporation operates in compliance with state laws.

6. Hold an Initial Board of Directors Meeting

Initial Meeting: After incorporation, the initial board of directors must hold an organizational meeting. During this meeting, the board typically adopts the bylaws, appoints corporate officers, authorizes the issuance of stock, and takes other necessary actions to set up the corporation.
Minutes: The actions taken during the initial meeting should be recorded in the meeting minutes, which are then stored in the corporate records.

7. Issue Stock Certificates

Stock Certificates: The corporation must issue stock certificates to its initial shareholders, representing their ownership in the corporation. The Articles of Incorporation must specify the total number of shares the corporation is authorized to issue.
Stock Ledger: The corporation should maintain a stock ledger to keep track of who owns shares, the number of shares owned, and any transfers of shares.

8. Obtain an Employer Identification Number (EIN)

EIN: An Employer Identification Number (EIN) is issued by the IRS and is used to identify the corporation for tax purposes. It is similar to a Social Security Number for a business.
Application: You can apply for an EIN online through the IRS website, by mail, or by fax. The EIN is required for filing taxes, opening a business bank account, and hiring employees.

9. Comply with State and Local Licensing Requirements

Business Licenses and Permits: Depending on the nature of the business and its location, the corporation may need to obtain various licenses and permits to operate legally. This can include state licenses, local business licenses, health permits, zoning permits, and others.
Industry-Specific Requirements: Certain industries, such as healthcare, construction, or financial services, may require additional regulatory compliance and specialized permits.

10. Register for State Taxes

State Tax Registration: The corporation may need to register for state taxes, such as corporate income tax, sales tax, and employer taxes. Each state has its own requirements and procedures for tax registration.
Tax ID Numbers: In addition to an EIN, the corporation may need to obtain state tax ID numbers for payroll, sales tax, or other specific taxes.

11. File Initial Reports (If Required)

Initial Report: Some states require corporations to file an initial report shortly after incorporation, typically within 30 to 90 days. This report often includes basic information about the corporation, such as its name, registered agent, and business address.
Fee: There may be a filing fee for the initial report, and failure to file can result in penalties or the loss of good standing with the state.

12. Create a Shareholders’ Agreement (Optional)

Shareholders’ Agreement: While not required, a shareholders’ agreement is recommended if there are multiple shareholders. This agreement outlines the rights and obligations of the shareholders, how shares can be transferred, and procedures for resolving disputes.
Purpose: The agreement helps to prevent conflicts among shareholders and provides a clear framework for decision-making and corporate governance.

13. File Annual Reports and Maintain Compliance

Annual/Biennial Reports: Most states require corporations to file annual or biennial reports to keep their information current with the state. This report typically includes information such as the corporation’s principal office address, registered agent, and directors.
Filing Fee: There is usually a fee for filing these reports, and the amount varies by state.
Ongoing Compliance: Corporations must adhere to various ongoing compliance requirements, including holding annual shareholder meetings, maintaining corporate records, and following state-specific regulations.

14. Foreign Qualification (If Operating in Multiple States)

Foreign Qualification: If the corporation intends to do business in states other than the one where it was incorporated, it may need to register as a foreign corporation in those additional states.
Filing Requirements: This typically involves filing a Certificate of Authority in the foreign state, paying additional fees, and appointing a registered agent in each state.

15. Maintain Corporate Records

Corporate Records: Corporations are required to maintain certain records, including minutes of meetings, bylaws, a stock ledger, and records of any actions taken by the board of directors or shareholders.
Record Keeping: These records are essential for maintaining the corporate veil, ensuring legal compliance, and protecting the limited liability of shareholders.

Summary

Starting a corporation in the U.S. involves choosing a unique name, filing Articles of Incorporation, appointing a board of directors and registered agent, and creating bylaws. Additionally, corporations must issue stock, obtain an EIN, comply with state and local licensing requirements, and maintain ongoing compliance with state regulations.

Each state has its own specific requirements and fees, so it’s important to consult the state’s Secretary of State or equivalent agency for detailed instructions. Legal or professional advice may also be beneficial to ensure all steps are properly completed and to maintain compliance with corporate laws.