Steps to Form a Company: Everything You Need to Know

The steps to form a company can be complex when choosing to incorporate under the Subchapter C of Chapter 1 of the IRS code.3 min read

The steps to form a company can be complex when choosing to incorporate under the Subchapter C of Chapter 1 of the IRS code. A corporation is its own entity distinct from its owners who are shareholders. This structure helps to protect the owners from incurring personal liability from the business. A corporation is subject to the corporate laws in the state where the business was incorporated.

Steps to Forming a Corporation

There are several steps that must be completed when you decide to form a corporation.

  1. Choose a legal business name: You must register your business name with the Secretary of State's office in the state where you wish to do business. Most states allow you to reserve a name for a fee while you are waiting to file your Articles of Incorporation, though it is for a limited time, often 30 days. If you do not register your company in the time frame, the name will become available again to the public.
  2. File your Articles of Incorporation: You will need to draft and files your Articles of Incorporation with the Secretary of State's office. You can choose to have an attorney draft them or complete them yourselves. The articles will need to have the name of the initial officers and directors who will run your corporation.
  3. Issue stock certificates to the initial shareholders: After your articles have been approved by the Secretary of State, you will need to distribute your stock certificates to the initial owners of the company based on their number of shares.
  4. Apply for business licenses and permits: You will need to obtain any required business licenses or permits that are required for you to operate in your chosen industry. You may be required to file for state and local licenses as well as federal ones.
  5. Apply for an Employer Identification Number: If you plan to hire any employees, you will need to file a form SS-4 with the Internal Revenue Service to obtain an EIN. Your EIN will serve as your company's tax identification and will be used for reporting employee wages. You may also be required to have an EIN to open a business bank account or applying for a loan.
  6. Apply for state or local identification numbers: If required, you will also need to file for any state and local identification numbers that are necessary for the payment of disability, unemployment, or other payroll taxes. If you are unsure of the state and local requirements, seek out the advice of an attorney.

Steps to Forming a Corporation in Delaware

Forming a corporation in Delaware is similar to starting a corporation in other states. Delaware has become a popular state for incorporating due to its favorable corporate laws. To form a corporation in the state of Delaware, you will need to:

Verify and Secure Your Brand Name

The first step in forming your corporation is by choosing your brand name. There are some requirements you will need to meet when choosing your name. Your name will need to:

  • Be distinguishable from any other named business name in the state. You can run a check on the state's website to see if it is available.
  • Not include any restrictive words such as "bank," "university," "trust," or "college."
  • Must contain a word indicating it is a corporation, such as "company," "limited," or "incorporated," or an abbreviation of one of these words.

You may also want to check to see if your name is available for a website and email as this will often be an important part of your business.

Appoint a Registered Agent

During the incorporation process, you will need to designate a registered agent to receive process paperwork and other vital corporate documentation. They will be the ones who will accept tax forms and legal documentation on behalf of your corporation. In Delaware, an owner can act as their own registered agent, though many corporations use a third party as the registered agent needs to:

  • Be available during normal business hours at a physical address.
  • Have your address made publicly available.
  • Be responsible for maintaining essential corporate paperwork.

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