This article assumes you want to self incorporate by forming a new corporation or limited liability company (LLC) yourself. In other words, you want to eliminate the middleman in the process to save legal fees or commissions. It is a simple process when you understand the fundamentals.
Still, self incorporation involves legalities and technicalities. There are consequences, potentially good or not so good, so be sure you consider your options and choose wisely. As always, because there are many complicated legal, tax, and non-tax issues that can result from your choices and actions, it is best – and I strongly recommend – that you consult with your professional legal and tax advisors before you go off and sign or file any documents for self incorporation. Also, please read my Notices and Disclaimer page.
SELF INCORPORATION
As Dr. Frankenstein created his monster, when you self incorporate you are designing a new legal being, an entity with separate legal existence and a life of its own. The state actually gives the creature its life, and the state regulates (and taxes) most of its aspects by their statutes. In exchange, officers, directors and shareholders receive benefits, such as limited liability. The corporation or LLC also enjoys limited liability; however, realize that its liability is limited to everything it owns.
Please read my article Business Incorporation for more details that can apply to self incorporation.
Once you have chosen your business type – corporation, LLC, limited partnership (LP), business trust, etc. – you may be able to get sample articles of incorporation from the state agency that files the creation document. Official state websites usually also provide much more information to help you get off on the right foot to self incorporate. They may also provide links to other state agencies where you can register your new company as required to get and stay in compliance with applicable security laws, tax authorities, labor laws, business licensing, and such bureaucratic red tape.
In some states, you can self incorporate online. Visit my Incorporate Online page for links to each state's specific webpage for this service.
PRIVACY ALERT: Remember, when you self incorporate, any information you include when filing articles online may become part of the public record. For example, Florida's online "E-Filing Service" for registering a Florida for-profit corporation, contains a field in the online articles of incorporation form for your email correspondence address related to your self incorporation. According to Florida's Online Filing Disclaimer this information "will be made part of the public record...will be available on the Division of Corporation's website for public view." Once this information is filed online, your email address will become publicly available for Internet trollers and creeps to find, use and abuse.
NAME SELECTION
When you self incorporate, you can usually search online for name availability for your new company. When you self incorporate be aware there are several factors up for consideration when choosing your new company's name. The company name should:
Be distinctly different from other company names, real or fictitious;
Contain the proper name ending (for example, "Inc." or "Ltd." or "LLC" or "LP", etc.);
Not contain words that have restricted use (such as, "bank" or "trust" or "school");
Not infringe upon another company's trademark;
Be cross-checked with an internet domain name registration for availability (I like GoDaddy.com).
For a good review of overall considerations when choosing your company name please read my discussion on incorporation name searches.
This is especially relative if you will self incorporate.
INCORPORATOR OR ORGANIZER
Many state statutes permit a corporation or LLC to be formed by a single person. This person is usually called the "incorporator" or "organizer" and generally is a natural person (human being). An incorporator may not be required to be a principal (i.e. an officer, director or shareholder of a corporation; or a manager or member of an LLC) in the new company. The incorporator's or organizer's function is to simply execute the articles of incorporation or articles of organization, respectively, bringing the new company into existence. As such, many corporations and LLCs are formed by incorporators or organizers who act as an agent of the ultimate owners. This is usually done for convenience, expedience, or to protect the privacy of the true owners. The public record of the articles of incorporation or organization would show the incorporator's or organizer's name and mailing address, while the new company's private records (it's "minutes") would show the original incorporator or organizer had resigned after appointing their successors, the actual directors/managers/owners of the new company, as the case may be.
If you self incorporate, you will use your own name as the incorporator/organizer.
REGISTERED AGENT
Each new company must have a "resident agent" (sometimes referred to as a "statutory agent") that is a natural (human) or artificial (a company) person who is physically located within the state where your company is formed or registered to do business. The resident agent is usually authorized to accept service of legal process, notices and demands on behalf of the new company. The resident agent generally has no liability or responsibility for the the actions of the company, its officers, directors or shareholders.
The registered agent is usually required by state statute to maintain certain records regarding the corporations they serve. Nevada Revised Statutes (NRS §78.105) requires a corporation's Nevada resident agent to keep at its registered office, among other things, (a) a Secretary of State-certified copy of the articles of incorporation and all amendments thereto; (b) a corporate officer-certified copy of corporation's bylaws and all amendments thereto; and (c) a stock ledger or duplicate stock ledger, revised annually, containing an alphabetical listing of the names, addresses, and number of shares held of all stockholders. The statute provides for a statement in lieu of the stock ledger or duplicate stock ledger setting out the name and address of the custodian of the stock ledger or duplicate stock ledger, to be maintained at the registered office of the resident agent.
You can serve as your company's resident agent when you self incorporate if you are physically resident in the state where the company is formed or registered to do business. When you self incorporate, you do not need to hire another third party to serve as the company resident agent (and pay their ongoing annual fee). Professional incorporation "mills", attorneys, accountants, and other service providers earn lucrative fees by providing this service to hundreds or thousands of companies each year. Many times, these services can assist you with the self incorporation process for a very low initial fee. They do this to get your residual resident agent business and the attached fees.
Nevada requires a resident agent to sign a certificate of acceptance of their appointment and attach it to the articles of incorporation or organization before filing will be made. This is common with other states, also. So, if you self incorporate without hiring the services of a professional advisor, you may still need to secure the services of a bona fide resident agent located in the state of incorporation. For a list of Nevada resident agents who have paid the Secretary of State a fee to be included on the list, please click here. If you will self incorporate in another, check for local resident agents online or in your Yellow Pages.
If a resident agent resigns, dies, becomes incapacitated or otherwise vacates the office, you generally must appoint a successor to fill the position within a short time specified by state law (for example, within thirty days). Failure to do so may result in a fine and/or suspension of your corporations good legal standing.
If you self incorporate, know the rules so you can stay in compliance.
REGISTERED OFFICE
The registered office of the corporation is usually a physical address for the company that is located within the state where the company is chartered or registered. This is usually the address for acceptance of service of legal process, notices and demands on behalf of the new company. For a Nevada corporation, the resident agent's physical address is also the corporation's registered office.
FILING FEES
The completed and signed (by the incorporator/organizer and resident agent, as may be required) articles of incorporation or organization are then filed with the appropriate state agency (Secretary of State, Corporations Division, etc.). The filing fee may vary depending upon different factors. For instance, Nevada's filing fee for a "profit corporation" is based upon the total number of authorized shares stated in the articles of incorporation. A corporation with authorized share capital of $75,000 or less will pay an initial filing fee of $75; a corporation with authorized share capital of over $75,000 and not over $200,000 will pay an initial filing fee of $175; a corporation with authorized share capital of over $200,000 and not over $500,000 will pay an initial filing fee of $275; et cetera, up to a maximum initial filing fee of $35,000. Nevada specifies how to calculate the total amount of authorized share capital for both "par" and "no par" value shares.
Additional filing fees may apply if you request "expedited" filing, certified copies of your articles, or other special services. For example, Nevada's Secretary of State charges an additional $125 expedite fee for 24-hour service; an additional $500 expedite fee for 2-hour service; and an additional $1,000 expedite fee for 1-hour service. Time constraints usually apply based upon the time of day the Secretary of State's Corporation Division receives your filing.
If you self incorporate, take a good look at your state's business entity statutes, and for free sample filing forms, filing instructions, and filing fees, please take advantage of my easy QuickLinks to each states' pertinent webpage.
AFTER FILING AND CREATION
Once you self incorporate by filing the articles of incorporation or organization with your state agency, you can purchase a "corporate kit". If you self incorporate, I recommend you do this immediately if you are going to self incorporate. This kit usually consists of a three-ring binder containing organizational forms for documenting the company's initial formalities. Such organizational formalities include the notice or waiver and minutes of the first meeting of the incorporator(s)/organizer(s); the notice or waiver of the first meeting of the board of directors or members; tax status election forms; sample bylaws; a stock transfer ledger; several customized blank share certificates for issuing the stock; and a company seal (if required by state statute). You can shop for corporate kits online by going to and searching the term "corporate kits".
Your corporation will need its own Employer Identification Number (EIN) that you can obtain by filing IRS form SS-4. You can find the form with instructions here. You can learn more about EINs by clicking here. You can apply online to obtain an EIN in only a few minutes by clicking here.
IMPORTANT ALERT: An LLC may or may not need an EIN. That depends upon your election of how you want the LLC to be taxed by IRS. Please see the subheading topic "Tax Considerations" in my article Starting an LLC
Again, I strongly recommend you consult with a licensed professional legal or tax advisor before taking any actions that affect any aspect of law or taxation.
COMPANY BANKING
Your newly formed and properly organized company will need its own separate bank account. It is customary for a bank to require several documents to open the new company account. These may include:
An original certifed copy of the articles of incorporation or organization;
A copy of a filed "fictitious firm name" or "assumed business name" form if applicable;
A corporate resolution authorizing the bank to open the account, and naming the corporate officers, and specifying the authorized account signatories; signed by the corporate secretary and embossed or stamped with the corporate seal;
A corporate account signature card signed by all authorized account signatories; and
Any other corporate documents or certifications required by bank policy.
Your company may also consider opening a brokerage account for investment and limited checking privileges. Brokerage firms are not necessarily licensed to do "banking"; however, they may offer services that you want. Brokerage firms will likely require corporate documentation to open a new account similar to the bank's requirements
IMPORTANT NOTE: Never mix your personal business or finances with those of the company. Co-mingling of funds will result in the potential piercing of your corporate veil should you be involved in litigation or, god forbid, a personal or corporate audit by a revenue agent or other bureaucrat. Please see my discussion on "Piercing the Corporate Veil" on my "Corporate Minutes" web page.
ONGOING FORMALITIES
Artificial entities like corporations and LLC must observe certain minimum corporate formalities, including the holding of meetings, adopting resolutions, and recording minutes. Do not neglect these responsibilities. If you have the authority and duty to call and preside over meetings – and to keep the official corporate minutes of formal proceeding – you MUST familiarize yourself with the basic rules and principles that govern the legality of those proceedings, and you MUST keep corporate minutes. Otherwise, the benefits of incorporating that you want and may be relying upon will not be there when you need them the most, i.e. in the event of litigation, bankruptcy, divorce, or a revenuer's examination.
If you need help writing the minutes for your company's meetings, or drafting resolutions, please contact me now.
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