Benefits of a corporation
A corporation offers liability protection to its owners which helps shield most of the owners’ assets from the corporation’s financial obligations, debts, and responsibilities. This is because a corporation is an entity that is separate from its owners, and only the corporation’s assets can be used to pay its debts and obligations. There may also be tax benefits to having a corporation.
Requirements for incorporating in Connecticut
Preparing your certificate of incorporation
To form a Connecticut corporation, you will need to file a certificate of incorporation with the Secretary of State and pay a filing fee. Your corporation officially exists as soon as the certificate is filed. The Certificate of Incorporation may contain many provisions, but it must include the following:
- Name of the corporation’s registered agent
- Names and addresses of incorporators
- Details on the corporation’s stock structure
In regards to the stock structure, the certificate of incorporation must state the total number of shares the corporation is authorized to issue. Stock can be divided into different classes or series, used for different purposes, for example some sorts of stock may offer voting rights in the company while others do not.
If there is more than one class or series of shares, the certificate must state the number of shares in each class or series and provide a designation for each class or series. Before shares are issued in a class or series, the certificate must also state the terms, including the preferences, rights and limitations of that class or series.
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Naming your corporation
Before filing a certificate of incorporation, you should research the availability of your proposed business name, which can be done by conducting a search on the Secretary of State’s website. You can reserve a name for your corporation for 120 days by filing an application with the Secretary of State.
When choosing a name for your corporation, it must adhere to the following criteria:
- A corporation’s name must contain the words “corporation,” “incorporated,” “company,” “Societa per Azioni” or “limited,” or the abbreviations “corp.,” “inc.,” “co.,” “S.p.A.” or “ltd.”
- The corporation name must be distinguishable from other business names on file with the Secretary of State.
An incorporator is responsible for delivering the certificate of incorporation to the Secretary of State for filing. Incorporators’ names and addresses must be listed in the certificate of incorporation. When specifying incorporators, you must adhere to the following requirements:
- Your corporation must have at least one incorporator.
- An incorporator must be a person.
If initial directors are not named in the certificate of incorporation, the incorporators must hold an organizational meeting to elect directors. They may also adopt bylaws and appoint officers. Once the organizational meeting is concluded, the incorporators have no other duties.
Corporate directors are responsible for establishing corporate policies and procedures and overseeing the management of the corporation. Directors must always place the interests of the corporation and its shareholders above their own personal interests.
A corporation may have one or more directors. The number of directors should be stated in either the articles of incorporation or the bylaws. Connecticut does not have any restrictions on who can serve as a director, but your corporation’s bylaws can contain eligibility requirements for directors.
Specifying a registered agent
A corporation must appoint a registered agent to receive legal processes addressed to the corporation, such as a lawsuit or legal documents. When specifying a registered agent, you must adhere to the following requirements:
- You must provide a Connecticut street address for your registered agent.
- The agent must consent to serve as a registered agent by signing the certificate of incorporation.
- The registered agent may be either a person who is a resident of Connecticut or a corporation, limited liability company or limited liability partnership that is formed in or authorized to do business in Connecticut.
- A corporation cannot be its own registered agent.
Stating a corporate purpose
Connecticut law does not require you to specify a corporate purpose in your certificate of incorporation.
Determining incorporation bylaws
A corporation’s bylaws specify its internal rules and procedures. Bylaws are not filed with the Secretary of State but are kept at the corporation’s principal place of business. Connecticut does not specify any particular content for the bylaws, but bylaws typically include such provisions as the number of officers and directors, the manner in which voting is conducted and the way meetings are to be held.
While Connecticut does not specify the content for corporation bylaws, it does maintain the following requirements:
- The directors or incorporators must adopt bylaws.
- The bylaws cannot include anything that is illegal or inconsistent with the articles of incorporation.
Costs of incorporating in Connecticut
The Connecticut Secretary of State requires a fee when filing a certificate of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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