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Are you looking to learn how to form a C Corporation in New York? If so, understand that there are several tedious steps to making that happen. At the same time, there are several caveats and nuances that only experience can teach.
Fortunately, you don't have to do it alone. At John F. Dennehy CPA, we’ve been helping entrepreneurs and business owners successfully transition to and create corporations by simplifying the process for them. Let's take a closer look at some of the basics involved in forming a C Corporation in New York as well as some of the essential basics.
A corporation legally separates the individual(s) who run the business from the business itself. It essentially makes the business a “person” and gives it the rights to legally conduct itself like how people do. A corporation can protect your assets from liabilities associated with the business, protects you personally if someone sues the business, increase your company’s appeal to investors, and creates tax savings. Just as a corporation has benefits, there are also distinct disadvantages you should consider.
In either case to create a corporation, one or more persons (known as incorporators) must get together and complete the certificate of incorporation before submitting it to the New York Department of State. In order to properly fill out the form, you must correctly do the following steps.
For your company to be considered a corporation, it must have a name that includes one of the following words: Incorporated, Incorporation, Limited, or an abbreviation of one of the three words. Before sticking with a name, it’s good practice to check the business name database available at the New York Department of State Division of Corporations. You are welcome to reserve a name in advance, but it will only be held for 60 days.
In general, corporate purposes lay out the framework of the entity and establishes three things:
Often, corporations will leave the purpose vague in order to create flexibility with how they operate. For example, if the purpose of a corporation is to lawfully earn profits for its shareholders, then any operation that fills this requirement to achieve the objective will be considered legal.
You must indicate which county within New York the corporation’s main office will be located at. Be sure to only enter the name of the county and not the actual address of the corporation in this section. Be mindful of which county you place because only Queens and Bronx are both the names of the county and the borough itself. Staten Island is referred to as Richmond County, Brooklyn is King County and Manhattan is known as New York County.
No corporation is complete without a clear picture of how its shares will be set up. Every business must designate the number of shares the corporation has the authority to issue in addition to whether they are without par value or with par value. If you don’t know the difference, stocks with a par value cannot be sold/issued at less than its monetarily stated par value; while stocks without par value may be sold/issued at any given price.
Provide an official address to the Department of State so that they may mail the company any process or lawsuit received. Every year, the corporation must certify the address is provided to the Department of State by completing the biennial statement online. It is to be completed during the month in which the original certificate of incorporation was completed.
Before submitting the certificate of incorporation, the name and addresses of the incorporator(s) must be included with a signature attached. Whoever signs the certificate of incorporation must provide their name and address to the Department of State as well. It should be noted that the official filing receipt is sent to the filer and not directly to the corporation or incorporators.
Once the filing fee of $125 has been paid to the Department of State’s Division of Corporations, the certificate of incorporation can be sent online, through the mail, in person, or through fax.
Now that you know how to form a C corporation, it may not be a bad idea to establish corporate bylaws before your first board meeting. Although you are not legally obligated to have bylaws, they help put in place the ground rules for how the corporation operates internally. Aside from its organizational upside, corporate bylaws show creditors, banks, the IRS, and other institutions that your company is legitimate.
We get it — forming a corporation can be confusing, even if you've done it a couple of times. However, you don't have to do it alone. The experts at John F. Dennehy CPA can help.
Contact us today for business consultation solutions.
We at John F. Dennehy CPA are a team of certified public accountants who service clients throughout Long Island. The services that we provide are comprehensive, and we can resolve multiple accounting needs for a client.