You're ready to start a corporation in Delaware! First, choose a unique and available name that meets Delaware's requirements. Next, appoint a registered agent who can receive important documents on your behalf. Then, file your Certificate of Incorporation with the Delaware Division of Corporations. Create corporate bylaws to outline internal rules and governance. Hold an initial board meeting to elect officers and approve bylaws. You'll also need to obtain business licenses, open a business bank account, and get a Federal Tax ID Number. Finally, maintain accurate records to ensure compliance with Delaware's corporate laws. Now, you're just getting started…
Choosing a Corporate Name
Determine your corporation's identity by selecting a unique and available name that complies with Delaware's naming requirements. You'll want to choose a name that reflects your brand and is easy to remember. Delaware law requires that your corporation's name include one of the following words or abbreviations: "Incorporated," "Corporation," "Company," "Limited," "Inc.," "Corp.," "Co.," or "Ltd." You can check the availability of your desired name by searching the Delaware Department of State's database.
Make sure to avoid names that are too similar to existing corporations or trademarks. You can reserve your chosen name for 120 days by filing a name reservation application with the Delaware Secretary of State. This will give you time to finalize your incorporation process without worrying about someone else taking your desired name. Remember to also check if the desired web domain is available to ensure consistency across online platforms. By choosing a unique and available name, you'll be well on your way to establishing a strong corporate identity.
Appointing a Registered Agent
You'll need to appoint a registered agent, a critical step in incorporating in Delaware, as this individual or business will serve as the official point of contact for your corporation. This agent will receive important documents, such as lawsuits and tax notices, on behalf of your corporation.
| Type of Registered Agent | Description | Cost |
|---|---|---|
| Individual Resident | A Delaware resident who can receive documents on behalf of your corporation | $0 (if you have a friend or family member) |
| Commercial Registered Agent | A business that specializes in receiving documents on behalf of corporations | $50-$200 per year |
| Law Firm or Accounting Firm | A professional firm that can receive documents and provide additional services | $100-$500 per year |
| Online Registered Agent Service | A company that provides registered agent services online | $25-$100 per year |
| Corporation Service Company | A company that specializes in incorporating and providing registered agent services | $100-$300 per year |
When choosing a registered agent, consider factors such as cost, reliability, and familiarity with Delaware corporate law. Remember to obtain the agent's consent before listing them on your incorporation documents.
Filing Certificate of Incorporation
Now that you've appointed a registered agent, it's time to file your Certificate of Incorporation with the Delaware Division of Corporations, which marks the official formation of your corporation. This document is a critical step in creating your Delaware corporation, as it provides essential information about your business.
When preparing your Certificate of Incorporation, you'll need to include the following details: your corporation's name, address, and purpose; the number of authorized shares and their par value; and the name and address of your registered agent. You'll also need to specify the incorporator's name and address. Make sure to proofread your document carefully to avoid errors.
Once you've completed your Certificate of Incorporation, you can file it online or by mail with the Delaware Division of Corporations. The filing fee is currently $89, and you can pay by credit card or check. After submitting your document, the state will review it and issue a certificate of incorporation, confirming that your corporation has been officially formed.
Creating Corporate Bylaws
With your corporation officially formed, you're ready to establish the internal rules and guidelines that will govern its operations, starting with the creation of corporate bylaws. Bylaws are essentially the rulebook for your corporation, outlining the structure, roles, and responsibilities of the company's management and shareholders. They'll help you navigate situations like shareholder meetings, director elections, and decision-making processes.
When creating your bylaws, consider including provisions that cover topics such as:
- The company's purpose and objectives
- The roles and responsibilities of officers and directors
- The process for holding shareholder meetings and elections
- The procedures for amending bylaws
- Conflict of interest policies
Keep in mind that Delaware law allows for a great deal of flexibility in drafting bylaws, so it's essential to tailor them to your corporation's specific needs. You can use a template or consult with an attorney to ensure your bylaws comply with Delaware law and meet your corporation's unique requirements.
Holding Initial Board Meeting
Now that you've created your corporate bylaws, it's time to hold your initial board meeting. At this meeting, you'll need to approve those bylaws and elect your corporate officers. You'll want to ensure that these important decisions are properly documented and recorded in your corporation's records.
Approving Corporate Bylaws
Hold your initial board meeting to approve the corporate bylaws, a crucial step in solidifying your corporation's internal structure and operational guidelines. This meeting is an opportunity to define how your corporation will operate, make decisions, and resolve conflicts.
During the meeting, you'll discuss and approve the corporate bylaws, which outline the rules and procedures for your corporation's internal governance.
Here are some key aspects to consider when approving your corporate bylaws:
- Define roles and responsibilities: Clearly outline the duties and powers of each corporate officer and director.
- Establish voting procedures: Determine how decisions will be made and votes will be cast.
- Outline conflict resolution: Develop a process for resolving disputes and disagreements.
Electing Corporate Officers
You'll need to elect corporate officers, including a president, treasurer, and secretary, to oversee daily operations and make key decisions during the initial board meeting. These officers will be responsible for managing the corporation's daily activities and making important decisions that will impact the company's future.
During the initial board meeting, you'll need to hold an election to fill these roles. It's essential to have a clear understanding of the roles and responsibilities of each officer to ensure the corporation is run efficiently. The president will oversee the overall operations, the treasurer will manage the finances, and the secretary will be responsible for maintaining records and ensuring compliance with legal requirements.
Make sure to document the election of officers and the acceptance of their roles in the meeting minutes. This will provide a paper trail and help prevent any potential disputes in the future. By electing corporate officers, you'll be taking a crucial step in establishing a strong foundation for your Delaware corporation.
Issuing Stock Certificates
Now that you've held your initial board meeting, it's time to focus on issuing stock certificates. You'll need to design these certificates, deciding what information to include and how they'll look. You'll also need to determine what types of stock you'll offer and keep track of all stock transactions accurately.
Stock Certificate Design
When designing your corporation's stock certificates, you must ensure they contain essential information, such as the corporation's name, the number of shares, and the par value per share. This information is crucial for maintaining transparency and accountability within your corporation.
Here are some key elements to include in your stock certificate design:
- Vital corporation information: Include your corporation's name, address, and state of incorporation (Delaware, in this case).
- Share details: Specify the number of shares, par value per share, and the class of shares (common or preferred).
- Security features: Consider adding security features like watermarks, holograms, or microprinting to prevent counterfeiting.
Remember to comply with Delaware state laws and regulations when designing your stock certificates. It's also a good idea to consult with a legal professional or a corporate services company to ensure your certificates meet all necessary requirements.
Types of Stock Offered
As you issue stock certificates, you'll typically offer one or both of the two primary types of stock: common stock and preferred stock, each with its unique characteristics and benefits. Common stock represents ownership in the corporation and gives shareholders voting rights. It's the most common type of stock and is often used to raise capital. Holders of common stock are entitled to receive dividends, if declared, and have the potential for long-term capital appreciation.
Preferred stock, on the other hand, has a higher claim on assets and earnings than common stock. It typically doesn't come with voting rights, but it does offer a fixed dividend payment and a higher claim on assets in the event of liquidation. This type of stock is often used to attract investors who want a relatively stable investment with a fixed return. As you decide which type of stock to offer, consider your corporation's goals, financial situation, and the type of investors you're targeting. By understanding the characteristics and benefits of each type of stock, you can make informed decisions about which one to issue.
Recording Stock Transactions
You'll need to maintain accurate and detailed records of all stock transactions, including issuing stock certificates, to ensure transparency and accountability within your corporation. This is crucial for compliance with Delaware state laws and regulations.
When issuing stock certificates, you'll need to keep track of the following:
- Certificate details: Record the certificate number, date of issuance, and the name and address of the shareholder.
- Share details: Document the type and number of shares issued, as well as the par value or consideration received.
- Shareholder information: Update your records with the shareholder's contact information and any changes to their ownership stake.
Obtaining Business Licenses
To operate legally, you need to obtain the necessary business licenses and permits for your Delaware corporation. This ensures you're compliant with state and local regulations, avoiding potential fines or penalties.
The licenses and permits you need vary depending on your business type, location, and activities. Some common licenses include:
| License/Permit | Issuing Authority | Purpose |
|---|---|---|
| Business License | Delaware Division of Revenue | Verify business identity and tax compliance |
| Sales Tax Permit | Delaware Division of Revenue | Allow sales tax collection and remittance |
| Zoning Permit | Local Municipality | Ensure compliance with local zoning laws |
You may need to obtain additional licenses or permits depending on your specific business activities. For example, if you're opening a restaurant, you'll need a food service permit from the Delaware Division of Public Health. Research the specific requirements for your business to ensure you're fully compliant.
Opening a Business Bank Account
After obtaining the necessary licenses and permits, you're ready to open a business bank account, a critical step in separating your personal and business finances. This separation is crucial for liability protection, tax purposes, and maintaining a clear financial record. To open a business bank account, you'll need to provide your business documents, such as your certificate of incorporation, business license, and EIN (which we'll discuss later).
Here are the essential items you'll need to prepare:
- Business documentation (certificate of incorporation, business license, etc.)
- Identification documents (driver's license, passport, etc.)
- Initial deposit (varies depending on the bank's requirements)
Remember to choose a bank that meets your business needs, considering factors such as fees, interest rates, and online banking capabilities. Having a dedicated business bank account will help you maintain a clear financial record, making it easier to manage your business's finances and make informed decisions.
Obtaining Federal Tax ID Number
Your business now needs a Federal Tax ID Number, also known as an Employer Identification Number (EIN), which serves as a unique identifier for tax purposes. This number is essential for filing taxes, opening a business bank account, and applying for credit. You can apply for an EIN online, by phone, or by mail through the Internal Revenue Service (IRS) website.
To apply online, visit the IRS website and follow the prompts. You'll need to provide your business name, address, and other identifying information. You'll receive your EIN immediately after submitting the application. If you prefer to apply by phone, call the IRS Business and Specialty Tax Line at (800) 829-4933. For mail applications, complete Form SS-4 and mail it to the IRS.
Regardless of the application method, you'll need to provide your business's name, address, and other identifying information. You'll also need to identify yourself as the responsible party, such as the CEO or owner. Once you receive your EIN, you can use it to open a business bank account, file taxes, and apply for credit.
Maintaining Corporate Records
As you set up your corporation in Delaware, you'll need to prioritize maintaining accurate and up-to-date records. You're responsible for keeping essential documents, such as meeting minutes and financial records, in a secure and organized manner. By doing so, you'll ensure compliance with state regulations and have a clear paper trail in case of audits or legal issues.
Record Keeping Essentials
Maintain a thorough and organized system for storing and retrieving corporate records, as this is crucial for ensuring compliance with Delaware's corporate laws and regulations. You'll need to keep accurate and detailed records of all corporate activities, including meetings, decisions, and transactions. This will help you stay on top of your corporation's affairs and provide evidence of compliance if needed.
Here are some essential records you should keep:
- Minutes of meetings: Document all meetings, including annual shareholder meetings, board of directors meetings, and committee meetings.
- Resolutions and actions: Keep records of all resolutions passed, actions taken, and decisions made by the board of directors or shareholders.
- Financial records: Maintain accurate and detailed financial records, including balance sheets, income statements, and tax returns.
Corporate Document Storage
You'll need a secure and organized system for storing and retrieving your corporation's documents, ensuring that all records are easily accessible and protected from loss or damage. This system should include both physical and digital storage solutions. For physical storage, consider using fireproof safes or secure filing cabinets to protect sensitive documents. Digitally, consider using cloud-based storage services that offer encryption and secure access controls.
It's essential to keep all corporate records, including articles of incorporation, bylaws, meeting minutes, and financial documents, in a centralized location. This will help you quickly retrieve documents when needed, ensuring compliance with legal and regulatory requirements. Remember to regularly back up your digital records and store them in a separate location to prevent data loss.
Conclusion
You've successfully formed a corporation in Delaware! Now, it's essential to maintain your corporate records, file annual reports, and hold annual shareholder meetings to comply with state regulations. Stay organized and keep your records up-to-date to avoid penalties and maintain your corporation's good standing. By following these steps, you've taken a significant step towards building a strong business foundation.