How To Set Up a Corporation

UPDATED: Jul 14, 2023Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 14, 2023

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UPDATED: Jul 14, 2023Fact Checked

A corporation is an artificial legal entity, typically chartered by a state, generally formed to operate a business. Thus, each state’s code of laws have a general corporation law or business corporation law that allows virtually anyone to obtain a charter to conduct most businesses. Certain types of corporations, such as banks, insurance companies, and public utilities often have to be formed either by an act of the legislature or under special laws.

The actual formal mechanics of creating a corporation is known as incorporation. Each state has its own set of laws governing the process of incorporating. The process involves completing and filing a Certificate of Incorporation or Articles of Incorporation and paying a filing fee. The specific contents of the Articles of Incorporation vary with each state’s incorporation laws, but there are common key features: the corporation’s name, the number of shares authorized, the names and addresses of the incorporator(s), and the address of the registered office and agent for service of process.

In terms of the actual filing, some people follow a “do it yourself” approach using (1) interactive software programs that automate the process, (2) tear-out forms available in many published guides to incorporating, or (3) fill-in-the blank forms that may be available from the State.  Many use a corporate service compoany to create the corporation.  Wise ones rely on an attorney to set up the corporation for them.

Corporate existence starts when the Articles of Incorporation are filed with the state office that handles incorporations (usually the Secretary of State or Corporation Commissioner), along with the required filing fees. Accelerated incorporations or same day filings are available in some states.

In addition to the standard corporation, two relatively new forms of entities known as a limited liability company (LLC) and limited liability partnership (LLP) offer many of the same benefits as the traditional corporation, plus some unique advantages.

Forming the corporation is just a small part of the total process of setting up a business and making sure what you are setting up makes sense for you.  Furthermore, once the corporation is set up, it becomes necessary to adopt by-laws and resolutions and a whole long paper trail to assure you the protections and benefits you are seeking by operating in corporate form.

Case Studies: Setting Up a Corporation

Case Study 1: DIY Approach

John, an aspiring entrepreneur, decides to set up a corporation on his own. He uses interactive software programs available online to automate the incorporation process. John completes the necessary forms and files the Certificate of Incorporation with the state office. He pays the required filing fees and receives confirmation of the corporation’s existence. However, John later realizes that he overlooked some crucial legal considerations and has to seek legal advice to rectify the situation.

Case Study 2: Professional Assistance

Sarah and Mark are partners who want to establish a corporation for their growing business. They decide to rely on a corporate service company to handle the incorporation process.

The service company guides them through the necessary steps, assists in preparing the Articles of Incorporation, and ensures compliance with state laws. With the help of the corporate service company, Sarah and Mark successfully set up their corporation without worrying about potential legal pitfalls.

Case Study 3: Attorney’s Expertise

Emily, an entrepreneur with a complex business structure, seeks the assistance of an attorney to set up her corporation. Emily’s business involves multiple shareholders, intricate ownership arrangements, and specific regulatory requirements. The attorney provides personalized advice, drafts tailored by-laws and resolutions, and ensures compliance with all legal obligations. With the attorney’s expertise, Emily establishes her corporation with confidence, knowing that her interests and legal rights are protected.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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