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 1. Check Name Availability Before filing for incorporation you must ensure that your proposed business name is not already in use by another entity. Visit the Arizona Corporation Commission's web site to Check Company Name for availability. |
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| 2. File Articles Of Incorporation The Articles of incorporation are the official document that "create" the legal entity for your company. They require certain key elements to be valid, but generally do not need to be complex or laden with numerous provisions for your company. Like a newborn infant who automatically receives constitutional rights and protection at birth, your company will be protected under numerous state statutes by virtue of incorporation from the day it is formed. There is no need to "re-write" the laws of Arizona into your articles! NOTE: You will also need to file a certificate of disclosure (COD) with the ACC when filing your articles. The COD provides background information on initial company owners and officers. |
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| 3. Publish Articles of Incorporation After the ACC approves your articles, you must publish them in a newspaper of general circulation within the county of incorporation for three consecutive editions of the newspaper. After publication, you will need to file an affidavit of publication with the ACC. |
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| 4. Apply For Appropriate Tax ID Numbers At a minimum you should file Form SS-4 to obtain an Employer Identification Number (EIN) from the IRS. Like an individual person's social security number, the EIN uniquely identifies your company to the IRS for tax reporting purposes. In order to pay wages you will need an Arizona ID number for withholding state employment taxes. You may also need to obtain a separate Arizona withholding number if you will be reselling material goods that are subject to transaction privilege tax. |
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| 5. Fund The Corporation This is a very critical step! Your business does not legally exist until it has been properly funded. The process involves "issuing stock" to all of the investors (which could be just you). In exchange for shares of the company's stock, the investors provide working capital to the company to meet its financial needs until revenues are self-sustaining. It is vital that you adequately fund your enterprise. A thinly capitalized company may be considered a "tax avoidance" scheme by the IRS, and the company's revenues could be considered income to you without the benefit of related company deductions. You should also open a checking account in your company's name (separate from your personal accounts) and use it exclusively for all business transactions. |
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| 6. File sub-chapter "S" Election If Appropriate If you want to be considered an "S" corp for IRS tax purposes, you must file IRS Form 2553 within 75 days of incorporation. |
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| 7. Apply For Local Permits And Licenses Municipalities differ on exact requirements, but you generally must apply for a business license with your local city. Usually these are just a license to collect transaction privilege tax, but you must have one even if you do not expect to collect the tax. If your business is home based, you may also need a zoning ordinance approval from your city before they will issue a business license. |
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| 8. Appoint Board Of Directors The board can include any number of members (who may also be significant shareholders). This is more of a symantec if you are a single-owner corporation, but is none the less an important step. Make sure you have company documents and meeting minutes reflecting this decision. |
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| 9. Adopt Bylaws ByLaws must be established to govern how the company operates. They should include provisions on how decisions are made, how directors and officers will be appointed, which officers or directors have veto power in the event of a management disagreement, and frequency of board and shareholder meetings. They should also stipulate how the company will be funded and operated on an on-going basis, from issuing stock to maintaining company records. There are many other provisions to consider when drafting ByLaws, be sure to include all the relevant concerns for your business needs and circumstances. |
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| 10. Establish Corporate Records Book This is often over-looked or slighted in new companies, but is completely non-optional. Many times a Corporate Records book is required to substantiate the legitimacy of a business. It includes copies of your original articles of incorporation as filed with the state, bylaws, blank stock certificates and stock ledger, meeting minutes of shareholder and board meetings, and virtually any other document that could be needed at a future date to validate strategic business decisions. There is no "wrong" item to store in a records book, but they generally are not used for day to day operational papers like contracts, bills, or receipts (these are usually stored in separate filing systems). Your corporate records book may be required in a court of law to substantiate the validity of your company's existence or significant business venues. |
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| IMPORTANT NOTE: If any of the above requirements are incomplete or non-existent, it will be much easier for someone seeking damages against your company to "pierce the corporate veil" and convey liability for company actions directly to shareholders and/or officers. |
