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How To Form a Business Corporation

A business corporation may be formed in the State of New York by filing a Certificate of Incorporation pursuant to Section 402 of the Business Corporation Law (“B.C.L.”).

Forming a Corporation

Some of the steps you need to follow to form a business corporation in the State of New York include:

Selecting a Corporate Name

In selecting a name for your corporation, Section 301 of the B.C.L. provides instructions on what legal descriptors are allowed in the State of New York.  A corporation must contain the word “Incorporated”, “Corporation” or “Limited” or an abbreviation thereof, such as “Inc.”, “Corp.” or “Ltd.”  In addition, B.C.L. § 301 provides information on what uses of words or phrases are permissible.  There are some words and phrases that cannot be included in the name without prior approval from the governing agency.  Your corporation name must be distinguishable from the names of other corporations, limited liability companies, and limited partnerships already on file with the New York State Department of State, Division of Corporations.  You can search for the availability of your proposed corporation name by submitting a written request to the Department of State, Division of Corporations, Once Commerce Plaza, 99 Washington Avenue, Albany, New York 12231.  The written request should state that you wish to determine the availability of a name and list the name(s) to be searched.  There is a $5.00 fee for each name submitted, which must accompany your written request.

Although you are not required to do so, you may consider registering your business name as a federal and/or state trademark.

Appoint a Director

Following the selection of a name, you need to appoint a director or directors of the corporation.  In New York, a corporation must have at least one director.  The business of a corporation must be managed under the direction of its board of directors, each of which must be at least eighteen years of age.  The directors need not be residents of the State of New York or shareholders of the corporation, unless so prescribed by the certificate of incorporation or by-laws.  You should set forth the number of directors who will compose the board of directors in the by-laws.  If you do not, the number will be one.

Filing a Certificate of Incorporation

The existence of a corporation begins upon the filing of the Certificate of Incorporation with the Department of State.  The Department of State’s website has a editable Certificate of Incorporation form.  The fee for filing the Certificate of Incorporation is $125.00 plus the applicable tax on shares.  There is a minimum tax of $10.00 on shares that the corporation is authorized to issue which must be paid at the time of formation of the corporation.  Every business corporation must designate in its Certificate of Incorporation the number of shares that the corporation has authority to issue and must state the “par value” of the shares or whether they are without “par value.”  Shares without par value may be issued or sold at any price.  Shares with par value cannot be issued or sold at a price less than the stated par value.  By default, the Department of State Certificate of Incorporation form contains an authorized stock structure of 200 shares with no par value.  Most corporations are formed with 200 shares no par value.  The $10.00 tax authorizes the corporation to issue a maximum of 200 shares no par value or a par value of all authorized shares up to $20,000. Corporations wishing to be authorized to issue more than 200 shares no par value or par value shares totaling more than $20,000 will incur a tax of more than $10.00. The tax rate is 5 cents per share of no par value stock and 1/20 of one percent (.05%) of the par value of the shares that have a stated par value. (Please see Section 180 of the Tax Law.)