Benefits of a Corporation
Forming a corporation can shield your personal assets from liability for business debts and obligations. A corporation may also protect your assets if someone sues an employee. There may also be other benefits to choosing to incorporate your business, such as tax savings.
Requirements for Incorporating in Louisiana
Preparing Your Articles of Incorporation
A corporation’s existence begins when you file articles of incorporation. To form a corporation, you must file articles of incorporation and an initial report with the Louisiana Secretary of State and pay a filing fee. The articles of incorporation may contain many provisions, but they must contain the following:
- Name of the corporation
- Corporate purpose
- Stock structure
- Names and addresses of incorporators
- The duration of the corporation, if it is not perpetual
- The corporation’s tax ID number (although the Secretary of State cannot reject the articles of incorporation if this is not included)
A corporation can have different types of stock, called classes or series. These types of stocks can have different advantages, for example one can offer voting rights while another may not.
In regards to the stock structure, the articles of incorporation must contain the following information:
- The articles must list the total number of shares the corporation is authorized to issue. If there is only one class of shares, the articles must state a par value for the shares or state that there is no par value. Par value is a minimum amount of money that must be paid for a share.
- If there is more than one class of shares, the articles must state a designation for each class, the number of shares in each class and their par value or that there is no par value.
- The articles must also either identify each series of a preferred or special class and provide the relative rights, limitations and preferences of each class or series or state that the board of directors has authority to determine these matters.
Naming Your Corporation
Before you file articles of incorporation, you should check the availability of your corporation name. You can do this by calling the Secretary of State’s office, searching the Secretary of State’s business records online service.
You can reserve a name for 60 days by sending a name reservation form to the Secretary of State or by using an online entity name reservation service. One 30-day extension is available.
Your corporation’s name must adhere to the following requirements:
- It must contain the words “corporation,” “incorporated,” “company” or “limited,” or the abbreviations “corp.,” “inc.,” “co.” or “ltd.” The word “company” or the abbreviation “co.” cannot be immediately preceded by the word “and,” e.g., Johnson and Company.
- Your corporation’s name must be distinguishable from the name of any corporation, limited liability company or trade name on file or reserved with the Secretary of State.
An incorporator is responsible for signing and filing the articles of incorporation and the initial report with the Secretary of State. Incorporators’ names and addresses must be listed in the articles of incorporation.
When specifying incorporators, you must follow these guidelines:
- Your corporation must have at least one incorporator.
- An incorporator may be an individual or an entity that is capable of contracting.
After the articles and initial report are filed, the incorporators have no further duties.
Corporate directors determine and implement corporate policies and strategies. Directors are fiduciaries, which means that they must be diligent and prudent in managing the corporation’s affairs and must always act in the best interests of the corporation and its shareholders.
The following guidelines apply when specifying your corporation’s directors:
- Your corporation must have at least one director. There is no upper limit on the number of directors you can have.
- A director must be a person.
- The initial directors must be listed in the initial report, and the number of directors should be stated in the articles of incorporation or bylaws.
The bylaws can establish other qualifications for directors.
Specifying a Registered Agent
A registered agent is appointed to receive legal documents on behalf of the corporation. The agent is responsible for forwarding those documents to the corporation.
You must adhere to the following requirements when specifying your corporation’s registered agent:
- You must name a registered agent and a registered office in the initial report that is filed with the articles of incorporation. The registered office address must be an actual street address, not a post office box.
- A registered agent may be a person who is of legal age and a legal resident of Louisiana or a company that has registered with the state to provide registered agent services.
Stating a Corporate Purpose
You can state your corporation’s purpose in general terms to provide flexibility. Louisiana’s form for articles of incorporation allows you to state: “This corporation is formed for the purpose of engaging in any lawful activity for which corporations may be formed.”
Determining Incorporation Bylaws
Bylaws are an internal document that outlines a corporation’s rules and operating procedures. They do not need to be filed with the Secretary of State but she be kept at your place of business.
Although bylaws are not required in Louisiana, the corporation’s directors may approve bylaws, which can include any rules and limitations relating to the corporation’s business and affairs, its rights and powers and the rights and powers of its shareholders, officers and directors. Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of Incorporating in Louisiana
The Louisiana Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.
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