How to Form A Corporation

Should you form a corporation yourself, or ask an attorney to incorporate?

Obviously, I'm biased. I am an attorney who helps sole proprietors incorporate, so I think legal advice is definitely worthwhile. More to the point, there are a lot of different tasks involved beyond simply filing Articles of Incorporation, and I'll be publishing this in an Entrepeneur's Legal Toolkit soon.

Meanwhile, here's a pithy but helpful description about do-it-yourself incorporation on the cheap in NY. It's called How to Form a New York Corporation and I've taken some excerpts for show:

STEP 1:

Prepare a “certificate of incorporation”. Download this sample form which is also available on New York’s Department of State, Division of Corporation website

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STEP 2:

Wait for the Department of State to do its magic. They will send you an official filing receipt and your certified copy of your certificate of incorporation. They may also send you a nice letter from Governor Pataki thanking you for doing business in New York.

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Effect of Step 1 and Step 2?

Your corporation was born. Or as the law (Section 403 BCL) likes to put it "upon the filing of the certificate of incorporation by the department of state, the corporate existence shall begin, and such certificate shall be conclusive evidence that all conditions precedent have been fulfilled and that the corporation has been formed under this chapter...."

STEP 3:

The incorporator (remember, that is you) must hold an “organizational meeting” to adopt bylaws, elect directors and so forth (see Section 404 of the Business Corporation Law). This meeting can also be a written statement. See this sample statement . New York allows a one man/woman corporation, so one person can wear all the hats: director, officer, secretary, president, incorporator and so forth...

For bylaws see this sample form .

Then you will have to put together the initial meeting of the directors. Again, this can be a written statement. See this sample form .

STEP 4:

Issue Shares.....

STEP 5:

Set Up and Keep Records

You can buy fancy corporate books that have preprinted share certificate, a corporate seal and folders for all documents relating to the corporation. If that makes you feel better, go for it. None of it is legally required......

Actually, the paperwork described above is legally required to have a real corporate and keep that all-important corporate veil separating your personal assets from a lawsuit. What isn't required is the leather binder. As a vegetarian, I don't like leather, personally. But that's another story.... What I really like is his next step:

STEP 6:

Reconsider whether doing all of this on your own is a good idea. While it isn’t brain surgery, you may be better off hiring legal counsel to oversee this process and help you understand the consequences for your particular business.

For example, do you know whether a corporation is the right entity for your business in the first place?

Do you know whether the form samples that are offered here and used in many of the cheap incorporation services are right for your unique situation?

Do you have business partners? You absolutely must enter into an agreement with them regarding the shared rights and obligations in your business venture. In the case of a corporation, this would most likely be a “shareholders agreement”.

Do you know whether the issuance of shares in your case is legal under state and federal securities laws?

And there it is, folks - the attorney plug. Yes, you can do all this for under $200, but you should speak with legal counsel, after all. As I like to say in my 30-second elevator speech, "don't roll the dice - get legal advice!"