You've thought of a business that won't nosedive after the holidays, assembled a team, found cheap office space and are ready to launch your company. But first, you'll have to jump through that paper hoop held by the ringmaster, the Clerk of the State Corporation Commission (SCC), known in some states as the Secretary of State. It's essentially your one-stop shopping center for setting up a business, whether it's a partnership, a corporation, a limited liability company or another entity.
You'll deal with this organization when you start your business and from year to year as you file annual reports, pay yearly dues or change details of your organization (directors, address of record, number of shares and so on). Although you might eventually delegate these tasks to someone else, it helps to know the basics of your own SCC--or, if you like, your "state paperwork commission."
What it does: Your SCC regulates many business and economic interests. Its powers range from setting utility rates to serving as the central filing agency for corporations. For your purposes, it's like a college registrar: You need to show up several times a year to hand over checks and documents. If you don't, your business might cease to exist!
Basic filings: First, check to see that the name you want to use is available through the commission or secretary of state. Next, file your organizational document, usually called "articles of incorporation." These contain a corporation's name, type of business, number of shares you can issue, street address, registered agent and board of directors. Send a check for the required fees with your articles. In some states, you need to publish your articles in a newspaper. That's usually it for starters; a yearly fee and annual report will be due on the anniversary of your incorporation.
Keeping in touch: Whether filing an annual report, proofreading and amending articles or dissolving a corporation, most business can be conducted by snail mail, telephone or e-mail.
Using the net: Many states have complete websites that can help you get started, as freelance journalist Todd Carter found out: "In Michigan, the SCC makes it very easy to print registration forms from its website. I downloaded a form to start a limited liability company, filled it out in two minutes and sent a $50 check. A few weeks later, I got confirmation that it went through."
Other states have similar set-ups: Arizona's corporate website, for instance, contains an FAQ section as well as a "corporation filing checklist." In Kansas, you'll find FAQs and a downloadable corporate handbook.
Still have questions? There are also websites like Bankrate.com, which includes a map of the United States that lets you click on a state for information on its laws, regulations and tax demands on new business owners. Also try Findlaw.com; go to the "Small Business Center" for information on business formation, financing, employment issues and operations. And pick up a copy of Corporations: Laws of the United States (Nova Publishing, $16.95, 800-462-6420) by Daniel Sitarz or Form Your Own Corporation and Launch a Business in Any State (Adams Media Corp., $19.95, 800-USA-JOBS) by J.W. Dicks.
Any tips from the pros? Attorney Laurie Forbes, who practices estate and business law in Northern Virginia, offers this advice for dealing with the SCC:
- Use preprinted forms liberally but judiciously.
- Keep an index of names and phone numbers of people who've been helpful to you.
- Use the web as an initial source for information. If you don't find the information or the form you need within five minutes, pick up the phone and try the toll-free number. If you end up on hold, try the non-toll-free number.
- Always keep your company in good standing. Don't let the deadlines for filing papers slip.
- Tough as it is, try to make friends with any bureaucrats giving you a hard time. Compliment them if you can.
Most businesses start in someone's mind, but they must exist on paper, too. Now you know how to do it.
Joan E. Lisante is an attorney and freelance writer who frequently writes about business issues and premature aging among parents of teenagers.