Choosing a corporation is not entirely dissimilar to forming an LLC as was discussed in our previous blog. To begin with, you will need to choose a name for your corporation. A standard search should be conducted to ensure the name you want to use is not already taken, or is not so similar it may cause confusion. The name must also not be misleading to the public. You can check the availability of a potential name either through a standard Google search or through the database on store with the Arizona Corporation Commission (ACC). If you find a name you like, and it is available, it may be smart to reserve your desired name with the ACC by filing an application. Typically there is a small fee for this application and a potential name can be reserved for up to 120 days.
A corporation is formed when papers are filed with the ACC. Among others, the first papers that must be filed are the Articles of Incorporation. The articles must include key information about the corporation such as name, address and contact information. In addition, the Articles must provide a statement of the nature of the business the corporation will be involved in. Along with the articles a Certificate of Disclosure for Business Corporations must be submitted as well. This certificate discloses additional information such as bankruptcies or criminal convictions of the founders of the corporation. All corporations in Arizona must also appoint a registered agent to accept service of process on behalf of the corporation if the corporation is sued. The agent can be a person or a corporation but it must be a person who is a full time resident or a corporation registered with the ACC.
In addition to the articles there are other requirements that must be met. For instance, a corporate records book must be set up. The records book would be where corporate paperwork is kept, such as the minutes made during corporate meetings. In addition to the record book a corporation should set up by laws. By laws are not a requirement but they are important to legitimize your corporation in the eyes of other entities and they clearly state the operating rules for the corporation. In addition, your corporation must publish the articles of incorporation within a set period of time after the ACC has approved your application. The publishing must be done in a paper of general circulation in the county where the corporation does business. In addition to location, publishing must occur for three consecutive publications. If you have questions about what publications are acceptable a list is generally posted on the ACC website for each county.
Once these steps have been completed the initial corporate directors must be appointed. The directors will serve on the board until shareholders vote to replace them. A vote is generally held once every year at the annual meeting of the shareholders. The first meeting of the directors is where the corporation can determine how it will operate, such as what bank to use, what shares of stock to issue, what the fiscal year will be, all the details of actually operating a corporation once it has been established. Although it is generally not required to issues stock many corporations issue paper stock to the shareholders, even if there is only one.
A corporation is a good business entity for a diverse range of needs. If you are interested in forming a corporation, or a different business entity, schedule a free consultation with one of our experienced lawyers to find out which entity may be right for you.