How to incorporate a business: Do-It-Yourself Checklist

Below is a step-by-step guide for how to incorporate your business in any state.

Step 1: Comply With Licensing and Zoning Laws

To incorporate, you need to make sure you comply with your state’s licensing and zoning laws.

Some states will require a business license or permit, while others will have regulated industries that require additional licenses, such as the construction industry in California.

Step 2: Conduct a Business Name Search

Before you can incorporate a business, you need to search for and determine the availability of your desired company name.

You will have to search whether a federal domain name is available.

Step 3: Name a Registered Agent

To incorporate a business, you will have to appoint a registered agent.

The registered agent is the officer who files and maintains records for your company name.

Step 4: Draft Articles of Incorporation

If your state requires it, you will need to draft an original copy of your articles of incorporation services.

These documents contain a basic outline of the legal business structure and procedures for your law firm.

Step 5: File Articles of Incorporation With the State

To incorporate a business, you will be required to file your articles of incorporation with your state or county.

This creates a new corporation that can do business in your state under the business name you have selected for it.

Step 6: Write up Corporate Bylaws

Corporate bylaws are an additional set of rules that set expectations for the internal functioning and maintenance of the company.

You can also include the corporate code of ethics and company mission statements.

Step 7: Start a Corporate Records Book

When incorporated, a company is required to maintain its corporate records or notebooks.

These records are used to keep track of the different activities of a business.

Step 8: Hold Your First Board Meeting

The first board meeting is held when the business is incorporated and opened for business so that all administrative procedures can be put in place.

This meeting usually takes place within the month of incorporation.

Step 9: Complete Additional Federal and State Requirements

Some states require additional business filings and licenses to be completed. In addition, most states will have a DOR that is charged with conducting investigations into the operations of the company.

Your state DOR will be able to provide additional data on how to fulfill the necessary requirements for your business in your state.

Wait! There’s One Additional Step for S-Corps

If you are an S-Corporation, there’s an additional step. After you become an S-Corp, the company’s SEC filing is reviewed by the IRS for tax purposes to determine whether your company should be taxed as C corps or a limited liability company (LLC).

After the IRS makes its decision and you file your tax return, your IRS representative will be able to advise you of how to proceed with incorporating your business.

Converting to a Corporation From Another Business Entity

If you have been a C-Corporation for several years, and you are considering converting that business into a corporation, there are a few more steps.

  1. Form a C Corp and complete the various requirements, including a signed Articles of Incorporation. Additionally, you will need to select an address for the service of incorporation process (i.e., for legal notices) and to file annual information returns on forming a corporation.
  2. File the Articles of Conversion with the State Register of Corporations. In addition, you’ll need to notify the Secretary of State in your state if you have changed your state of incorporation.
  3. Complete the annual report and file it with the state.

Choosing Which State to Incorporate In

Incorporating your business in a state with a favorable business climate and tax laws is advantageous. Most states offer the following benefits:

  • No minimum wage or overtime laws
  • No worker’s compensation laws
  • Prevailing wage laws on public works contracts

+ State sales tax rate of 5% or so, state income tax rate of no more than 10%, personal property tax is typically 1%

Incorporating and taxes

Incorporating in the United States is accomplished by filling out the forms filed with your secretary of state and registering with the federal agency, the U.S. Federal Trade Commission (FTC).

In addition to federal requirements, many states require filings such as certificates of existence or articles of organization for each new business entity. In most cases, there is a fee for filing with both agencies.

Often there is also a fee to register with the state; this fee varies greatly, from nothing to several hundred dollars for each corporation.

The purpose of an S-Corporation is to avoid double taxation. An S corporation must meet several requirements in order to be allowed as an “S” corporation.

The primary benefit of an S-Corporation is the tax advantages exemption provided by the Internal Revenue Code section 1341, which ensures that all shareholders share equally in profits and losses. S-Corporations can also offer the benefit of providing a clear, documented paper trail for all transactions.

This can be useful in preventing fraud and theft from occurring within a business due to a lack of documentation.

Need Help Incorporating? An Attorney Can Help Your New Business Succeed

Attorneys can help your new business succeed by crafting the legal documents that must be filed to incorporate your business and by minimizing mistakes that could cause you to incur hefty fines or penalties from the state. Don’t go at it alone. Hire a qualified business attorney for small business incorporation today!

What Are the Major Advantages and Disadvantages of Incorporating a Small Business?

Incorporating a small business has distinct advantages and disadvantages.

Advantages of Incorporation

  • The principal advantage of incorporation is the ability to offer a tax structure that passes profits and losses to shareholders. This way, the stockholders are able to reap the benefits as well as suffer along with the corporation in loss situations.
  • You also have personal liability protection from your state’s “limited liability” designation. Limited liability means that in most cases, you will not lose more than the value of shares of stock owned by the corporation.
  • Depending on where you are located, your state’s rules may allow for lower taxes and fewer restrictions than other business types of organizations. Furthermore, you are able to issue corporate stock to raise capital for your business.

Disadvantages of Incorporation

  • One of the greatest disadvantages of incorporation is that much more paperwork must be filed and maintained. This increases the paperwork burden for you and your employees and can increase legal fees.
  • Another disadvantage is that government regulations are more complex. As an example, a corporation must file annual tax returns and keep accurate records of all business transactions and employee pay. Further, there are specific rules regarding stockholders’ meetings, board of directors’ meetings, voting and privacy rights, dividends, acquisitions of other companies, and similar corporate matters.
  • There is also the risk of being audited by the IRS. The IRS may scrutinize these records and request that you produce additional documents, which can become very costly to produce and defend against judicial review.

Final Word: Why Incorporate your Business?

Following this guidance, we understand that incorporating is a good choice for business owners concerned about liability. After you incorporate, you are protected from personal liability for the company’s debts. As a result, if the company fails, creditors cannot come after your personal assets to pay off their claims.

From this site, you may be wondering how to set up an S corp? It’s actually easier than most people think.

There are many benefits to incorporating a business, so it might make sense to discuss the advantages of S corp incorporation with a qualified attorney.

Incorporation can protect a business owner from lawsuits, save you money by keeping your tax rate low and make raising capital easier.

Once you know the pros and cons of incorporation, you can decide whether or not incorporating falls in line with your business goals. If you still have questions, no worries! You can do market research and see the audience’s insight. There are plenty of other options for small businesses looking to go big.

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