Definition of a Corporation
Many people who want to incorporate their business often reckon the true meaning of a business corporation. More specifically, a business structure known as a corporation operates as a distinct legal entity. Shareholders own it, and a board of directors oversees it by appointing officers to manage the company’s day-to-day operations and dealings. A Corporation, also known as a C corp, is a lawful entity that is independent of its owners or what we call Directors of the business.
As a corporation is alluded to as a ‘lawful individual entity,’ it can buy, sell, and own property independently. It also has the ability to sign contracts, sue other people, and be sued. It is essential to keep in mind that it cannot be termed as a nonprofit organization, a municipal corporation (such as a city or town), or a private corporation formed solely for the purpose of making a profit. Nevertheless, the majority of corporations are established with the intention of generating profits for their shareholders.
Steps To Form A Corporation
One might usually ponder upon the most preferred procedure that aids their understanding of how to start a corporation in New York state, however, the basic requirements remain the same in most states in the USA. Here are the 6 significant points of setting up a corporation –
- Get Started With Your Name – The word “Incorporation”, “Incorporated”, “Limited,” or an abbreviation, must appear in the name of your company. The name of your corporation must stand out from the names of any other businesses that are already registered with the New York Secretary of State. The business name database of the Division of Corporations of the New York State Department of State can be used to see if a name is available and has not been used before by any other corporation in the State.
- Filing the Certificate of Incorporation – By submitting a Certificate of Incorporation to the New York Secretary of State, your corporation is established legally. The name of the company must be included on the certificate; the mission of the company; the county in New York where it has its main administrating office; the structure of the stock; the Secretary of State’s role as the company’s representative for service of process; and the name and address of the individual to whom any received process should be sent in the SOS.
- Registered Agent – For service of process in the State, every corporation in New York is required to appoint the New York Department of State as its registered agent. If the corporation is sued, the Department will accept and forward legal documents on its behalf. You, a corporation officer or director, could serve as a Registered Agent. Your company’s New York Registered Agent must have a physical address in New York as well.
- Draft Corporate Bylaws – Corporate bylaws should be drafted jointly by shareholders and directors. How frequently and when the directors meet, whether the business will run on a calendar year or a fiscal year, the length of the directors’ terms and other crucial decision-making steps will all be included in this document.
- Hire Your Board Of Directors – The business’s overall management is the responsibility of its board of directors. They could be held personally liable to the corporation and shareholders if they commit any fraudulent act. The officers who are in charge of the day-to-day operations of the company are chosen by the board of directors each year. The president, secretary, and treasurer are among these officers that are deemed crucial to the corporation.
- Meet The Critical Tax and Regulatory Obligations – After establishing your New York corporation, you will need to comply with a number of legal requirements. The following are the requisites –
- EIN: An EIN, or employer identification number, is required for your business. By filling out an online application on the web, you can get an EIN. There is no fee for filing at this stage.
- New York State Taxes: Even if a corporation does not operate a business or incurs financial losses, it is still required by New York State Tax Law to submit annual reports and pay franchise taxes. The obligation to pay franchise taxes begins on the date the company’s existence begins and continues until the Secretary of State legally dissolves the company. The website of the New York Department of Taxation and Finance contains additional information.
Forming your corporation isn’t as difficult as one may think it is. Fortunately, you can seek guidance from many corporate experts that can aid your journey in starting a corporation in New York state so you can streamline the process and aim at commencing business at the earliest!