Your step-by-step procedure to complete the corporate organization process:
File Articles of Incorporation. The initial step in incorporating a business is to file articles of incorporation in the state Corporate Filing Office, which is usually the secretary of state’s office. This is done in the state where you choose to organize and/or do business.
Conduct an Organizational Meeting. Once the articles of incorporation have been filed, the incorporator(s) or initial directors should hold an organizational meeting. If no directors are named in the articles of incorporation, then the initial incorporator(s) will generally hold the organizational meeting. If directors are named in the articles of incorporation, then the directors will usually hold the organizational meeting. (An alternative to holding a meeting is to use written consent in lieu of a meeting if all participants agree on the action to be taken.)
There is no one required way to conduct such a meeting. Typical actions taken at the organizational meeting may include the following:
- Appoint Directors – At the organizational meeting, the initial incorporator(s) generally appoint the corporation’s directors to serve until new directors are appointed or elected. These may be the same person or people who are also the shareholders and officers of the corporation.
- Appoint Officers – The directors then typically appoint officers of the corporation. The typical offices are president, vice president, secretary, and treasurer. If desired, a CEO and chairman of the board of directors can also be appointed.
- Authorize Stock – At this meeting, it is also common to authorize stock issuance to the business participants according to their ownership percentage.
- Adopt Bylaws – Corporate bylaws must also be prepared, adopted, or approved. The bylaws contain the basic rules and procedures for operating the corporation. Most bylaws are fairly standard, but they usually include requirements for holding meetings, such as notices, the number of directors and how they are selected, information about stock certificates, etc.
- Set Up Corporate Bank Account – You should set up a new bank account for your corporation. It is considered a separate legal entity from you as an individual. Banks differ on their requirements, but most want a copy of your Articles of Incorporation and your new Employer I.D. number to set up the account. You should avoid paying personal expenses from the corporate account. The proper way is to pay yourself a salary, draw, dividend, etc., and then deposit those funds in your personal account and then pay personal expenses from your personal account. Your accountant should be able to set this up. The corporate account should be reserved for paying business or corporate expenses. This helps maintain the separation of the corporation as a separate legal entity and may be an issue that is considered by a court if you are ever sued for personal liability.
Special Note. Instead of or in lieu of holding an actual meeting, corporate law authorizes shareholders or directors to conduct corporate business without a meeting if all of the participants agree in writing to the action being taken. This procedure can be used in place of any corporate meeting, including an organizational meeting or annual meeting.