Glossary – Documents Needed to Establish a U.S. Company
- June 17, 2020
- Posted by: Management inSites
- Categories: Insites, Marketing
Welcome back to our series on U.S. business terminology. In this series of posts, we highlight some important terms and what they mean. Want to know more? Just contact us and ask!
Starting a company in the U.S. is a fairly quick and easy process. Normally, you can apply and have your company registered in less than a week. While easy, there are some things you should have in order to set yourself up for success:
- Articles of Incorporation: Sometimes also referred to as the Certificate of Incorporation or the Corporate Charter (and are similar to the European Articles of Organization), the Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada and are filed with a state or other regulatory agency in which the corporation wishes to reside.
- Bylaws: Rules governing the internal management of an organization which, in the case of business corporations, are drawn up at the time of incorporation. The bylaws, which can usually be amended by the directors themselves, cover such points as the election of directors, the appointment of executive and finance committees, the duties of officers, and how share transfers may be made. Bylaws cannot countermand the laws of the government.
- Stock Certificate Shares: A document showing stockholders’ ownership in the company. The certificate shows the number of shares, par value, class of stock (e.g., common stock), and voting rights. When endorsed, stock certificates are negotiable.
- Federal EIN (Employer Identification Number): This is a number assigned to a company by the Internal Revenue Service. The EIN, also known as a Federal Tax Identification Number, is used to identify a business entity. The number is used for reporting withholding tax, but also for such things as opening a bank account in the company’s name. An EIN can be obtained from the IRS for free and is usually written in the form 00-0000000.
- State EIN: State Employer Identification Numbers (EINs) are tax identification numbers assigned to businesses operating in states that collect personal income taxes. This number is different from the tax numbers assigned for unemployment taxes, corporate taxes, and state sales taxes. If your business has employees in multiple states, you will need multiple State EINs. Nine states do not collect personal income taxes and have no unique State EINs. These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, and Tennessee. For these states, businesses will operate under their federal EINs.
- Registered Agent: Most jurisdictions in the United States require that any business entity that is formed or doing business within their borders designate and maintain a Registered Agent (also known as Statutory Agent), depending on the laws of the individual jurisdiction in which the business entity is registered. The purpose of a Registered Agent is to provide a legal address (not a P.O. Box) within that jurisdiction where there are persons available during normal business hours to facilitate legal service of process being served in the event of a legal action or lawsuit. Although laws vary by state, the Registered Agent typically must be a legal resident of the state in question.