Damon L. Mayer, LTC, EA

Forming a Corporation Checklist

Forming a Corporation Checklist

This Checklist summarizes the main steps to take and critical issues to consider when forming a corporation. While it covers the principal issues involved in creating a corporation, each state has its own statutory requirements that must be satisfied.

Also, each corporation is formed for a different purpose and will have unique issues and circumstances (for example, the type of business the corporation will conduct and whether it plans to go public) that must be reviewed before forming the corporation. 

Incorporation Matters 

Select the Type of Entity
  • Is the client aware of the different types of entities and their features?
  • Is a corporation the best choice of entity based on commercial, legal, and tax perspectives? 
  • Will the corporation be a C-corporation (the most common corporate form) or elect to be treated as an S-corporation for US federal income tax purposes? 
  • After selecting the type of entity, who will prepare the necessary IRS forms?

Select the State of Incorporation
  • Where will the principal place of business be located?
  • Will the corporation need to qualify to do business in other states?
  • Are there special tax matters to consider?
  • Are there plans for the company to go public?

Choose a Company Name
  • Does the name satisfy statutory requirements in the state of incorporation?
  • Is the name available in the state of incorporation and any other states in which the corporation may qualify to do business?
  • If not incorporating immediately, consider reserving the name to be available when the entity is ready to be formed.
  • Will the name serve as a domain name, trademark, or service mark? If so, consider running a separate search (such as a trademark search) to look for similar names in the marketplace.

Draft the Certificate of Incorporation
  • Does the certificate of incorporation satisfy statutory requirements in the state of incorporation?
  • Who will be the incorporator?
  • Does the state of incorporation have any specific requirements regarding optional provisions? 
  • Will the corporation be public or remain private?
  • Has a registered agent been selected? The service company engaged in filing the certificate of incorporation often acts as the registered agent for an additional fee.
  • What is the corporation's registered address?

File the Certificate of Incorporation
  • Will the certificate of incorporation be filed directly with the secretary of state or will service company be used?
  • Is timing an issue? Counsel should be familiar with how long it takes to form a corporation in the target jurisdiction.
  • Does the state of incorporation accept copies of signatures, or is an original document required?
  • How will the filing and administrative fees be paid? Will the service company advance them (they typically do)?

Draft the By-Laws
  • Will the corporation be public or remain private?
  • Are the by-laws consistent with the provisions of the certificate of incorporation? 
  • Does the client have any concerns or objectives the by-laws should reflect?

Draft the Statement (or Action) of the Incorporator
  • Did the incorporator adopt the by-laws?
  • Did the client decide who the initial directors will be?
  • Did the incorporator elect the initial board of directors?
  • Are there any other matters on which the incorporator should act?
  • Does the counsel's law firm have a policy for or against acting as the incorporator?

Prepare the Initial Acts of the Board of Directors
  • Will there be a board meeting, or will the board act by unanimous written consent?
  • Did the client decide who the initial officers will be?
  • Are there any other specific actions or documents the board should or needs to approve?

Issue Stock
  • Has a basic subscription agreement been prepared?
  • Has the stock certificate been filled out following the applicable statutory requirements?
  • Have all issuances been recorded in the stock ledger, and are there copies of all stock certificates?
  • Have appropriate restrictive legends been included on the back of the stock certificates?

Post-Incorporation Matters

Prepare the Minute Book
  • Has counsel, the client, or the service agent ordered a minute book and corporate seal?
  • Are copies of all corporate documents, resolutions, and stock certificates in the minute book?
  • Will the law firm or the corporation hold the minute book?
  • Apply for an Employer Identification Number
  • Has the client applied for an Employer Identification Number (EIN) for the corporation or will it request counsel to do so?

Other Considerations
  • Are any state filings required in the state of incorporation?
  • Are any state or county business licenses required in connection with the corporation's business? For example, if the corporation will operate a restaurant, it may need several permits.
  • If the corporation conducts business in other states, have all of the necessary foreign qualification forms been filed?
  • Does the client need or want a stockholders' agreement?
  • If two or more parties are forming the corporation, have they been advised of their rights to seek separate counsel concerning their individual interests?
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