Forming a Corporation? 5 Things to Do First

If you want to start your own business, a corporation is one of the most viable business entities that you obviously need to consider. A corporation is an independent legal entity owned by shareholders. The U.S. Small Business Administration provides that, though these entities have many long-term benefits, they are more complex than other business structures, as they often have costly administrative fees and many complex legal and tax requirements. The manner in which the government taxes these businesses depends largely on whether they fall under “C” corporations or “S” corporations. Once you choose incorporation as appropriate for your business, it is great to understand the steps you will take to organize it as a corporation.

Decide on a Business Name

The first important step is to choose an original name that complies with the laws of your state. Your state may require the name to incorporate identifying words like “limited” or “incorporated.” You should do a basic search on the United States Patent and Trademark database to confirm if your business name meets all the legal requirements.

Register with Your State Government

If the name you have proposed is available, it is important you register it with your state government immediately. By filing the name, you will reserve it for yourself for a given period. Since the specific filing requirement varies from state to state, check with the U.S. Small Business Administration for the requirement of your state.

Choose Directors

The board of directors is not only in charge of overseeing the day-to-day operations of your corporation, but it also secures the interests of shareholders and investors. These managers may be investors, officers of the company, or individuals with no stake in the firm.

Prepare the Necessary Permits

After completing all the required steps to restructure your business as a corporate entity, you will need to abide by the requirements of running your company in your state. Before launching your business obtain a business license and an employment identification number (EIN) and research if there are other legal matters you need to address.

Hire a Lawyer

Incorporation can have many long-term benefits, but the process is often complicated. The only way you can ensure your new company complies with all the legal requirements in the incorporation process is by hiring a competent lawyer from a firm like Carter West to guide you through the process.

Conclusion

Though corporations are the most complicated to set up and maintain, they have several long-term advantages, including the ability to attract high-quality and motivate employees and to generate capital. But before you rush into incorporation, ensure you have a clear understanding of the process and take it one step at a time.

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