There are benefits to starting a corporation, such as limited liability, tax advantages, transferability of ownership, and unlimited life, to name a few.
The following step-by-step guide will show you how to start a corporation in Louisiana.
1. Select a name for your corporation
Prior to officially forming your corporation, you need to first decide on a name for your business. Your Louisiana corporation name must comply with naming requirements in the state.
General corporate name guidelines
Additionally, you’ll need to adhere to the following guidelines:
- Your Louisiana corporation name cannot include the words “redevelopment corporation,” “casualty,” or “electrical cooperative.”
- Your Louisiana corporation name cannot include the term “doing business as” or an abbreviation that suggests your corporation name is a DBA
- Your Louisiana corporation name cannot imply in any way that it is a nonprofit, charity, or government organization
- Your Louisiana corporation name cannot suggest that the company is organized for unlawful purposes or any purpose that’s not stated in the Articles of Organization. Additionally, do not include any words that consist or comprise deceptive, immoral, or scandalous matter
- Your Louisiana corporation name should include one of the following words or abbreviations: Inc., corporation, limited, company, Corp., Co, Inc, Ltd
For additional guidance on choosing a Louisiana corporation name, refer to the Louisiana state statute.
You may also want to protect your business name with a trademark. After confirming that the name is indeed available, you can choose to have it trademarked for your business. Trademarking your Louisiana corporation name ensures company brand nationwide protection, backed by federal law.
It also ensures that no other business entity in the state will be allowed to use the same, or similar name as yours. Additionally, customers will never be confused about who they are actually doing business with.
To trademark your Louisiana corporation name, go to the US Patent and Trade Office and submit an application to trademark your business name.
Your Louisiana corporation entity name is basically its legal name. This is the name that the state uses to identify your business and is also the name that should be used on all formation documents.
DBA (Doing-business-as) name
While it is not a legal requirement to register a DBA in the state of Louisiana, you may want to consider this option. If you plan on using any other name aside from your legal or entity name, you’ll need to register a DBA. A DBA is A “doing business as” name and is also referred to as an assumed name.
2. Nominate a registered agent
Prior to registering your Louisiana corporation with the Secretary of State, you’ll need to nominate a registered agent. Registered agents are often referred to as statutory, resident, or service of process agents; however, they all mean the same thing.
The primary role of the resident agent is to receive compliance documents and government correspondence on your corporation’s behalf.
You may appoint anyone to be your corporation’s registered agent, provided they meet the following criteria:
- The statutory agent must be at least 18 years of age or older
- The statutory agent must have a physical street address in Louisiana where business is conducted
- The resident agent must maintain availability during normal business hours to ensure that you did not miss out on signing important legal documentation
- The resident agent must consent to the appointment
3. Appoint initial directors at the organizational meeting
A crucial step in forming a corporation in Louisiana is holding the initial Board of Directors meeting. During the first organizational meeting, the board of directors will elect corporate officers of the corporation and review and approve corporate bylaws, issue shares of stock, choose a corporate bank account, and decide the corporation’s business structure.
Your corporation is required to nominate at least one corporate director who will oversee the operations of the corporation until the first shareholders’ annual meeting.
Meeting minutes will also need to be taken as this is necessary to protect shareholders from court actions and lawsuits. The minutes provide a record of what actions and decisions are taken in the meeting, and while they do not need to be submitted to the state, they need to be stored with your company’s corporate records.
4. File Articles of Incorporation
One of the most important steps in this process is filing the Louisiana Articles of Incorporation, also referred to as the Certificate of Incorporation. This is because filing the articles officially and legally creates your corporation in the state.
As this is such a crucial step, you’ll need to provide the requested information, which is:
- The Louisiana corporation’s name
- The duration of the corporation. Since the end date of the business hasn’t been established as yet, most corporations choose perpetually. Alternatively, real estate investment and investment funds will have a final date already established to close the corporation.
- The purpose of the corporation. Most Louisiana corporations use a general business purpose statement; however, a more specific purpose can also be listed
- The number of shares the company will have the authority to issue
- The address and names of the corporation’s incorporators. This could either be someone helping with the formation of the entity or one of the owners of the corporation
- Since P.O. Box addresses are not allowed, you’ll need to submit a street address of the corporation’s initial registered office. The address you provide could either be where corporate records are stored or the actual address of the company
- The street addresses and names of the company’s initial directors
Once you compile the relevant information, file the Louisiana Articles of Incorporation online or submit the Form via mail to the following address:
Louisiana Secretary of State
P.O. Box 94125
Baton Rouge, LA 70804-9125
5. Create and approve bylaws
Corporate bylaws will need to be created and approved by your corporation. Simply put, bylaws are the internal document that makes the rules and operating procedures clear for everyone who is a part of the corporation.
They do not need to be submitted to the Secretary of State. However, they should be kept on file at your place of business for reference as and when needed.
While the bylaws are not a legal requirement, the corporation’s directors may create and approve bylaws that can include any limitations and rules relating to the company’s affairs and business.
The bylaws will also outline shareholders, directors, and officers’ powers and rights. An important point to note is that your corporation’s bylaws may not include anything that is inconsistent with the Articles of Incorporation or the law.
6. Select a share structure
Every Louisiana corporation needs to decide on a share structure. The share structure involves the share of stock that presents a unit of ownership of a company. Therefore, the percentage of ownership in the company is represented by each share of stock.
For instance, when your corporation decides to issue stock or issue one share of stock to a stock owner, then that shareholder owns 100% of the corporation.
Shares of stock may be structured into classes. Each class is known as a shared class and holds a different set of privileges and rights. A corporation may have multiple classes, and each of these classes may hold any number of shares.
7. Obtain an EIN
Every Louisiana corporation will need to secure an EIN or Employer Identification Number for tax purposes. It’s used as a form of identification by the IRS and is essentially a social security number for your business. However, an EIN is useful in several instances, such as opening a business bank account for your corporation, hiring employees, and applying for business licenses and permits.
In order to obtain an EIN or tax number, you’ll need to apply through the IRS website.
The application is completely free of charge after forming your corporation. The quickest way to obtain an EIN is by using the online EIN assistant. Alternatively, you’re free to download the IRS Form SS-4 and submitted to the Internal Revenue Service at the following address:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
8. File Louisiana state taxes
Depending on your type of corporation, you may be liable for the following corporate taxes:
- Louisiana franchise tax: Louisiana corporation franchise tax is a net worth tax that corporations are liable for based on the privilege of doing business in Louisiana.
- Louisiana corporate income tax: Louisiana’s corporate income tax is based on a series of marginal tax rates. For additional information on this, refer to the Department of Revenue. Additionally, in the state of Louisiana, S corporations are also liable for corporate income tax.
- Louisiana sales tax: Any corporation that plans on selling physical products in the state will need to obtain a seller’s permit prior to doing so. This may be done via the Louisiana Department of Revenue’s website. Upon successful application, you’ll receive a certificate allowing your business to collect sales tax on taxable goods.
- Louisiana employer tax: All corporations in Louisiana that hire employees will need to register for Louisiana employer tax via the Louisiana Workforce Commission’s website.
9. Louisiana business licenses and permits
Depending on the type of business you’re running and where your new business is located, business owners may require one or more business licenses and permits to operate in the state legally.
- Resale certificate: Every Louisiana corporation that will be purchasing merchandise to resell will need to obtain a Louisiana Resale certificate. The certificate will allow you to avoid paying sales tax on goods being resold to customers.
- Professional license: If your business is a professional corporation, then you need the appropriate licensing before offering your services in the state. Some of the common professions that require licensing in the state include physical therapists, detectives, interior designers, barbers, cosmetologists, and more.
10. Annual report requirements in Louisiana
Louisiana corporations are required to file the Louisiana annual report every year on or before the anniversary date that the corporation initially filed the Articles of Incorporation. The annual report must be filed online with Louisiana’s geauxBIZ website.
11. Costs of starting a corporation in Louisiana
The filing fees below apply to all Louisiana corporations:
- Name reservation: $25
- DBA name: $75
- Articles of Incorporation: $75
- Annual report: $30
- Louisiana Certificate of Good Standing: $20
Next steps after forming a corporation
After completing the necessary steps and filing the relevant documentation to form your Louisiana corporation, the following steps will also help keep your business on good ground.
Obtain a corporate bank account
Opening a corporate bank account allows you to separate personal finances from your corporation’s finances. It also simplifies business tax filings and streamlines the accounting processes. Once you’ve obtained an Employer Identification Number, you can go ahead and open a bank account for your Louisiana corporation. You also need to take along your corporation’s formation documents.
Obtain a business credit card
A dedicated credit card for your corporation, much like a business bank account, helps to separate personal and company expenses. Additionally, a business credit card allows you to build your business’s credit score and history, allowing your corporation to access loans and credit as and when you need it. The higher your business credit score, the more loans you have access to. Additionally, you’ll also enjoy higher credit limits for your corporation.
C corporations, S corporations, and limited liability companies share a few similarities. These include providing you with personal liability protection, allowing you to expand your business and take on new owners. Both business structures pass-through income to owners, who then report it on their personal returns.
Nonprofit corporations are able to raise more money for their cause since they’re tax-exempt. They often do so by accepting tax-deductible donations and do not pay income tax on money that is received. Alternatively, sole proprietorships are formed to generate profit.
A C Corporation or a C corp is the default designation for corporations. However, C corporations are not pass-through entities and therefore are taxed twice, both at the corporate and personal income levels. This is known as double taxation.
C corporations are considered separate legal entities. Therefore, if a C corporation is sued, the owners will not be liable for damages. However, while personal assets cannot be touched, obtaining business insurance will provide you with more cover.
A shareholders agreement is basically a contract that regulates the relationship between the corporation and the shareholders.