This Pre-Incorporation Checklist is designed for individuals who want to incorporate a
small business that will be owned by a few shareholders who will take part in the day-to-
day operations. This can be a useful tool when starting a business with other people. It
sets forth the material terms between prospective shareholders so that there is no
confusion once the corporation is actually formed. This document may be customized
to fit the specific needs of the individuals. It should be used by individual who intend to
incorporate a business.
PRE-INCORPORATION CHECKLIST
[Comment: This checklist is designed for people who want to incorporate a small
business that will be owned by a few shareholders, and specifically, for a business in
which each shareholder will take part in the day-to-day operations of the company.
A pre-incorporation agreement can be a very helpful tool when starting a business
with other people. The goal of the pre-incorporation agreement is to lay out the
essential and material terms between the prospective shareholders so that there is
no confusion once the corporation is actually formed. Many times, the process of
drafting a pre-incorporation agreement can cause tension between the prospective
shareholders, which subsequently may result in abandoning the business idea
altogether. If this happens, this should be seen as a positive because it is much
better to confront managerial, operational and sometimes personal issues early,
rather than after everyone has invested so much time and money to incorporate the
business.]
1. Shareholders' Names and Duties
A. _______________________________________________________________
B. _______________________________________________________________
C. _______________________________________________________________
D. _______________________________________________________________
E. _______________________________________________________________
[Comment: Be sure to insert the names of all of the shareholders.]
2. State of Incorporation
________________________________________________________________________
[Comment: Be sure to research the state in which you plan to incorporate.
Corporations are created under state law and each state has its own rules on how to
form a corporation. A common place to form your corporation is in the state where
you and the other shareholders live and plan to do business. In some cases,
incorporators choose to incorporate in other states (Delaware is a common one).
Seek the advice of a corporate and/or tax attorney before doing so. While there may
be some advantages, you will likely end up paying taxes in the state where you
operate your business, so the advantages may not outweigh the disadvantages.]
3. Corporate Name
________________________________________________________________________
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[Comment: Include the name of the new corporation and make sure the name
complies with the corporation laws of your state. Some states require one of the
following words or abbreviations to be included in the name: Corporation,
Incorporated, Company, Limited, Corp., Inc., Co. or Ltd. You can check on name
availability in advance, generally on the website of the Secretary of State. States
prevent two or more corporations from registering the same name.]
4. Corporate Purpose
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
[Comment: Describe the purpose of the corporation. You are going to want describe
the business purpose broadly enough to cover all of your intended and possible
business activities.]
5. Shares of Corporate Stock
________________________________________________________________________
________________________________________________________________________
[Comment: Insert the total number of shares the corporation will issue to the
shareholders signing the Agreement, as well as the total number of shares each
individual shareholder will purchase.]
6.
________________________________________________________________________
________________________________________________________________________
[Comment: Insert the names and salary of any employees that the corporation
intends to hire.]
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