Benefits of a corporation
A corporation helps to protect your personal assets because the shareholders of a corporation are generally not liable for the corporation’s obligations. In addition, a corporation can help to protect you personally if an employee or business partner is accused of wrongdoing. Other benefits of a corporation may include tax savings and facility in transferring shares between owners.
Requirements for incorporating in Virginia
Preparing your articles of incorporation
Your corporation’s existence begins when the State Corporation Commission of Virginia issues a Certificate of Incorporation, which happens after you file articles of incorporation with the Commission and pay a fee. The articles of incorporation may contain many provisions, but, at a minimum, they must include the following:
- Name of the corporation
- Stock structure
- Names and addresses of incorporators
- Initial directors, if your registered agent is a director
- Registered agent and registered office
In regard to your corporation’s stock structure, the articles of incorporation must list the total number of shares the corporation is authorized to issue. If there is more than one class of shares, the articles must list the number of authorized shares in each class and a distinguishing designation for each class or series of shares. The articles must also state the preferences, rights and limitations of each class or series.
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Naming your corporation
Before filing your articles of incorporation, you should determine whether your proposed corporate name is available. You can do this at the State Corporation Commission’s website.
A corporate name may be reserved for 120 days by filing an application with the State Corporation Commission. You can extend a reservation for additional 120-day periods during the 45-day period leading up to the reservation’s expiration.
When choosing a name for your corporation, you must meet the following requirements:
- Your corporation’s name must contain the word “corporation,” “incorporated,” “company” or “limited,” or the abbreviation “corp.,” “inc.,” “co.” or “ltd.”
- The name must be distinguishable from the name of any other active business entity in Virginia, except general partnerships, or any name that is currently registered or reserved.
Specifying incorporators
An incorporator’s main responsibility is signing and filing the articles of incorporation. You must adhere to the following requirements when specifying incorporators:
- The articles of incorporation must list the names and addresses of the incorporators.
- There must be at least one incorporator.
- An incorporator must be a person.
- If the articles of incorporation do not name initial directors, the incorporators must hold an organizational meeting after incorporation to choose directors. The incorporators may also appoint officers and adopt bylaws. After that, the incorporators have no additional responsibilities.
Specifying directors
Corporate directors are responsible for setting policies and directing the management of the corporation. Because directors are fiduciaries, they are obligated to act in the best interests of the corporation and its shareholders.
You must meet the following requirements when specifying directors for your corporation:
- There must be at least one director. Although there is no specified maximum number of directors, the number should be specified in the articles of incorporation or bylaws.
- Virginia does not have any eligibility requirements for directors, but eligibility requirements may be stated in the articles of incorporation or bylaws.
Specifying a registered agent and registered office
A registered office is the place where your corporation will receive official correspondence and legal documents. A registered agent is a person who receives documents and correspondence on behalf of the corporation.
You must meet the following requirements when specifying a registered agent and registered office:
- The articles of incorporation must list the street address of the registered office and the city or county in Virginia where it is located.
- A registered agent may be an individual or a business entity.
- If the agent is an individual, he or she must reside in Virginia and must also be either a director of the corporation or a member of the Virginia State Bar.
- If the agent is an entity, it must be a corporation, limited liability company or limited liability partnership that is authorized to do business in Virginia.
Stating a corporate purpose
Virginia does not require you to state a corporate purpose in the articles of incorporation. All Virginia corporations are formed for the purpose of engaging in any lawful business.
Determining incorporation bylaws
A corporation’s bylaws provide the directors, officers, and shareholders with guidelines for operating the business. Although Virginia law does not specify the content, bylaws usually contain such provisions as rules for the election of officers and directors, the number of officers, directors, and committees, and the manner in which meetings of shareholders and directors are called and conducted.
The following requirements apply when determining your corporation’s bylaws:
- The directors or incorporators must adopt bylaws.
- The bylaws must be consistent with Virginia law and the articles of incorporation.
Costs of incorporating in Virginia
The Virginia State Corporation Commission 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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