Benefits of a Corporation
Forming a corporation protects your personal assets if your business is sued or experiences financial difficulties. Unlike a general partnership or sole proprietorship, a corporation is a separate legal entity from its owners, and only the corporation’s assets can be used to satisfy the corporation’s financial obligations. There may also be other benefits to forming a corporation, such as tax savings and greater appeal for investors.
Requirements for Incorporating in Ohio
Preparing Your Articles of Incorporation
To form an Ohio corporation, you must file articles of incorporation and an appointment of statutory agent with the Secretary of State, as well as pay a filing fee. Your corporation exists as soon as you file the articles, unless a later date is specified. The articles of incorporation must include the following:
- Name of the corporation
- Location of the corporation’s principal office
- Stock structure
- Names of incorporators
- Statutory agent form
- Amount of initial stated capital, if any
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not.
Regarding stock structure, the following applies:
- The articles of incorporation must list the authorized number of shares that have par value, the par value of those shares and the authorized number of shares without par value. The articles must list any express terms of the shares.
- If the shares are divided into more than one class, the articles must list a designation for each class, the authorized number and par value, if any, of the shares in each class and the express terms of the shares in each class.
Naming Your Corporation
The Secretary of State recommends that you check the availability of your proposed corporation name before filing articles of incorporation. This can be done by searching the Secretary of State’s records online or by calling or emailing the Secretary of State’s office.
You can reserve a corporation name for 180 days by filing an application with the Secretary of State.
Your corporation’s name must meet the following requirements:
- A corporation’s name must contain the words “corporation,” “incorporated” or “company,” or the abbreviations “corp.,” “inc.” or “co.”
- A corporation’s name must be distinguishable from other business names on file with the Secretary of State.
An incorporator signs and files the articles of incorporation and statutory agent appointment with the Secretary of State. The following requirements apply when specifying incorporators:
- Incorporators’ names must be listed in the articles of incorporation.
- Your corporation must have at least one incorporator.
- An incorporator may be a person or a business entity.
- If the articles of incorporation do not name initial directors, the incorporators may either meet to appoint directors or issue subscriptions for shares so that the shareholders can meet to appoint directors. The incorporators then have no further responsibilities.
Corporate directors are responsible for the overall goals, policies and strategies of the corporation. They are fiduciaries, which means their actions must be in the best interests of the corporation and its shareholders.
The following requirements apply when specifying directors for your corporation:
- A corporation must have at least one director. Although Ohio law does not otherwise limit the number of directors a corporation can have, the number of directors may be established by the articles of incorporation, the bylaws or by a vote of the shareholders.
- A director must be a person who is at least 18 years old. The articles or bylaws can establish additional qualifications for directors.
Specifying a Statutory Agent
A statutory agent, sometimes called a registered agent, is responsible for receiving notices, demands and legal documents on the corporation’s behalf and passing those documents on to the corporation. When specifying a statutory agent for your corporation, you must adhere to the following requirements:
- You must file an appointment of statutory agent document with the articles of incorporation. It must include the statutory agent’s name and street address and be signed by the agent.
- A statutory agent must be one of the following: a person who is a resident of Ohio, a corporation formed in Ohio or an out-of-state corporation that is licensed to do business in Ohio.
Stating a Corporate Purpose
Ohio does not require a corporate purpose in the articles of incorporation. If no purpose is specified, the purpose of your corporation is to engage in any lawful act or activity for which a corporation may be formed.
Determining Incorporation Bylaws
A corporation’s bylaws, sometimes called “regulations,” outline the corporation’s internal rules and operating procedures and may include provisions for governing the corporation, conducting its affairs and managing its property. Bylaws must be consistent with the law and the articles of incorporation.
An Ohio corporation may adopt bylaws, but they are not required. As such, they are not filed with the Secretary of State.
Costs of Incorporating in Ohio
The Ohio Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. The cost for filing the articles is dependent on the number of shares of stock. Corporations are also required to pay state and federal income taxes.
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