Having your small business labeled as a corporation can give your entrepreneurial project some great tax advantages as well as liability coverage. The processes and benefits vary based upon the state your business is based in, but it is always a major step for any startup business.
Having your business venture labeled as a corporation also brings up a sense of respect amongst customers, potential investors, and even your own sense of pride. Having that “inc.” next to your business’s name lets everyone know that you’re serious about your vision.
Incorporation is fairly straightforward in most states, but it can take anywhere from one to six weeks and up to $500.
Depending on how complicated your company’s legal status is or how specific your state’s laws are, it might be advantageous to invest in a business lawyer to navigate some of the nuances of these major points.
Consider Local Laws
While this may seem obvious, there is a chance that there are some minor licensing or zoning laws that you as a small business owner are not aware of. This won’t be an issue unless you are looking to start a corporation involving adult/child care or food/alcohol service.
Medical services such as urgent care clinics or dental offices will want to make sure that there is nothing else to sort out with your state’s board.
Make Sure Your Name Is Unique
Most state offices will return applications that feature the names of previously incorporated businesses, but they also offer directory services to ensure that your name isn’t already taken. This might not be an issue if you are operating in a niche industry, but very saturated markets can be a problem.
You can save yourself weeks of hassle if you use your state’s services to make sure you’re not following an invalid application for incorporation.
Write Your Corporate Charter
Also called articles of corporation, this document is the official paperwork that entrepreneurs will file with the state to serve as the legal establishment of their company. They are not very complicated but are necessary within the United States to file for incorporation.
Most states require a company name, a general corporate structure outline, and the number and type of shares to be put on the stock market upon initial release. You should also name a registered agent which is an entity that can officially receive correspondence in the name of your business.
You will also need to name a board of directors, but this can be a formal arrangement that you could then alter moving forward. The state board of directors merely requires a precursory list with address information.
Establish Corporate Records
Once your state paperwork has been filed you will want to start a book of corporate records. This document will be useful to show the IRS that you are operating in compliance with state tax laws and any other corporate bylaws.
The records book also typically contains board meeting notes, as well as loan and stock information. Making sure that your record-keeping is starting off on the right foot is always important, but this responsibility only increases when documenting a corporation’s more extensive and scrutinized information.
Incorporating your business can be an excellent decision in expanding your small business’s scope, but it will require some diligence on your part as the entrepreneur at the helm. While not a wildly technical affair, incorporation does need you to follow some simple steps (albeit very carefully).
Further information on expanding your small business, Global Resources Reviews can help you with every question you might have!