State Guide: Corporation Laws

Small business owners who want to start a new business must follow special rules called state corporation laws. These laws help protect people who own businesses and those who buy things from them. There are different types of businesses, like sole proprietorships and partnerships. There are also limited liability companies (LLCs), limited liability partnerships (LLPs), and corporations. Laws governing these different business structures are not the same, especially in areas such as personal liability for business debts and the business's tax obligations.

This article will discuss corporations and the state laws pertaining to these business entities.

Corporations Generally

A corporation is like a person in the eyes of the law. This legal entity can own things, owe money, and do business. The most important aspect of corporations is that they offer limited liability protection to the owners of the corporation. This means that if the business gets into trouble, the business owners don't use their money or personal assets to fix it. But it's not so simple. Corporations must follow several rules to incorporate and continue existing. For example, they must pay business taxes and send tax returns to the Internal Revenue Service (IRS) for federal taxes.

Requirements for Business Corporations

To start a corporation, you must first do a few things by law. First, choose a unique business name, meaning that no one else has it. Then, tell the secretary of state (or a similar state agency) about your business by filing the appropriate paperwork, like the articles of incorporation. You will also need to pay filing fees, depending on your jurisdiction.

After your corporation is formally incorporated, you will generally need to get a special ID number from the IRS. This number is called an employer identification number (EIN). This number is like a social security number for the corporation. You can use it to open a business bank account and file taxes.

Corporations must also keep good records of their business activities and money. They must follow both state and federal law on record keeping. Sometimes, they may also need business licenses from the state or local government. Finally, your state might require an annual report or other ongoing requirements. This is why it's so important to know your state's rules before diving into business.

State Corporation Laws

Select a state from the following chart to view its corporations code. See FindLaw's Incorporation and Legal Structures section for additional articles and resources.

Navigating Support: Resources for Corporations

For corporations, especially startups and nonprofits, understanding business law and tapping into available resources is key to your success. The federal government offers a treasure trove of help through federal agencies like the Small Business Administration (SBA). The SBA is dedicated to supporting entrepreneurs. The SBA and Small Business Development Centers (SBDCs) are fantastic providers of assistance programs.

These programs cater to a variety of business needs, from crafting a business plan to securing funding. They play a pivotal role in economic development by ensuring small businesses have the support they need to thrive. These agencies also often hold workshops and training sessions, offer one-on-one counseling, and provide access to online resources and tools.

Additional Resources

• Business Formation QuickStart
• State Guide: Forms and Fees for Business Formation
• Top 10 Reasons to Contact an Attorney Before Choosing a Business Form

Let an Attorney Help You Comply With Your State's Corporation Laws

Want to learn more about corporation laws or need help incorporating them in your state? A good first step is to contact a small business attorney in your jurisdiction. An attorney specializing in small business incorporation will be able to guide you through the process.

Start today by finding an experienced business attorney near you.