If you are determined to pay no more than $99 dollars for your business incorporation, why not do it yourself?
Here is how:
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.
How to fill out the form:
Under "First": Fill in the name of your corporation.
[Note: You cannot choose just any name. The name has to end with
Incorporated, Corporation or Limited, or one of the following
abbreviations: Inc., Corp. or Ltd. Also, the name of the corporation
must be distinguishable from the names of other corporations, limited
liability companies and limited partnerships already in existence in
New York. You can search whether your name is already in use here.
Finally, New York forbids the use of certain terms in corporate names
or only allows certain names after approval. For example, you cannot
use “chamber of commerce”, “state police”, or “state trooper” in the
name of your corporation. For more forbidden or restricted names, look
here in Section 301 of the New York Business Corporation law.
Caution: Even if your name is o.k. under New York law, it may still
violate someone else’s right in the name based on trademark protection.]
Under "Second": They give you the text in the form. Fine to leave
as is. But know that some activities are unlawful. See here in Section 201 New York Business Corporation law.
Under "Third": I hope this one is self-explanatory. Hint: Manhattan is New York County
Under "Fourth": Leave as is. “200 no par value” is the cheapest option, I’ll explain below.
Under "Fifth": Fill in the address where you would like to receive legal papers.
Next Page:
Under “Incorporator Information Required”:
Fill in your name and address again and sign where indicated.
Filing this certificate of incorporation makes you the “incorporator.”
Fill in your name and address again on the bottom of the page.
You are done with the certificate of incorporation. Now you need to
file your certificate of incorporation with the New York Department of
State.
You can fax the certificate to the Department of State at (518) 474
1418. Of course, they want money from you for filing your
certificate. While there are other ways to pay, I find the easiest is
to use their credit card authorization form and fax it together with
the certificate of incorporation. Download credit card authorization form.
In the credit card authorization form, fill in the name of your
corporation, check the first box "Filing of Documents and
Certificates", put "$135" in the right hand column, and give your
credit card information.
Do yourself a favor and choose expedited service for an extra $25;
Not choosing expedited service will prolong filing for weeks and
weeks. Also, request a certified copy of your filed certificate of
incorporation for an extra $10, plus expedited service on that one for
an extra $25. (You will most likely need this for the opening of a
bank account). That brings you to a total of $195. You will have to
pay this amount no matter who is incorporating your business, because
these are filing fees due to the State of New York.
Why is it $135 to incorporate your incorporation in the first place
you ask? Because it costs $125 to form a corporation in New York (see here) and $10 is the minimum tax due on the corporation’s shares required by Section 180 (5)(c) New York Tax Law. Since we chose 200 shares of no par value in the certificate of incorporation, $10 is due.
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.
If you are impatient and don’t want to wait for the mail to arrive,
you can check on the filing status of your corporation in the corporation and business entity database (the same site where you searched for the availability of the name). If your corporation appears, it has been filed.
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
If you looked at the sample form of the minutes for the initial
meeting of the directors, you noticed that it included an authorization
to issue shares to particular persons for a certain amount of money.
Upon receipt of the money for the shares, issue the shares by filling
out a share certificate (such as this one
), have it signed by the appropriate officers and give it to the
respective shareholders. Know this: You cannot issue more shares than
authorized under your certificate of incorporation. Since we
authorized 200 shares, you can issue up to 200 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.
What is required is that you keep records of all resolutions of the
shareholders and directors, the shares issued, the names and addresses
of all shareholders and the dates when they became shareholders.
None of these records are public, but you must keep them organized
in order to prevent trouble with the tax authorities and to preserve
the limited liability shield a corporation offers.
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?
If you need help with "How to Form a New York Corporation", call a licensed small business attorney in your area.
