Interested in incorporating your business? Not sure where to start? Not to worry! Our friends at MyCorporation have compiled this handy blueprint to help you turn your small business into its own, separate legal entity. All you have to do is follow seven simple steps meant to help you determine the right structure for your small business, and make sure you have everything needed to actually do business:
7 Steps to Incorporate Your Business
- Evaluate the Benefits of Incorporating or Forming an LLC vs. Remaining a Sole Proprietor
By default, most new businesses are sole-proprietorships. And while sole proprietorships are certainly much easier to run than an LLC or a corporation, they leave you completely liable for the business’s debts. That means that if you are sued or go out of business, your personal assets could be seized! Because of this liability problem, we strongly recommend you consider forming an LLC or a corporation.
- Determine Whether Your Business Should Be a Corporation or an LLC
Corporations and limited liability companies both help protect you, and your personal property, but there are some key differences between these two structures. Running a corporation is very different than running a limited liability company, and your final decision will very likely depend on what you’d like to do with your company, and how you want to raise money.
- Choose a Business Name and Make Sure It is Available For Use
Your company’s name will be the foundation for your brand, so it’s important that you ensure you can actually use that name before you fill out any paperwork. Luckily, most states maintain a database of business names, which makes it easy to find out whether or not you can use the one you want. However, you may want to go a bit beyond the normal state-level registration, and look into trademarking your new name.
- Determine the State In Which You Want to Incorporate
Since corporations and LLCs are separate, legal entities, they can be located in another state. However, while there may be some benefits to incorporating or forming an LLC in another state, it’s often more expensive and involves extra paperwork. You’ll need to carefully consider the pros and cons of staying in your home state, or looking elsewhere.
- File For Incorporation with the State
Once you’ve chosen the state you want to form your business in, you’ll have to fill out the necessary paperwork. Though each state is different, they all normally want the same, basic information, like your business’s name, its address, and some information on its members or incorporators. It’s also a good idea to compile and adopt corporate bylaws or an operating agreement to help you govern the company.
- Make Sure Your Business Has a Registered Agent and Employee Identification Number
Most states require corporations and LLCs to have a registered agent – a person or company designated to receive legal documents on behalf of the business, and act as the official point of contact. In addition to a registered agent, you’ll also need an Employee Identification Number, which is like a social security number for your business. The IRS uses this to track what your business owes, and you’re required to have one before you begin hiring.
- Obtain Necessary Business Licenses (DBAs)
Before you open your doors, you’ll need to apply for any necessary licenses and permits. Different states and industries have different requirements, so it’s important that you spend some time finding out what you need – otherwise you could be closed. The most basic type of license will be a Doing Business As name, which you’ll need before you conduct business or collect money under a name that’s not your own, but it’s likely that your local and state governments will ask for a bit more than just a DBA.
Exclusive: Incorporate Your Business in 3 Steps
- Answer a few questions online or by phone.
- MyCorporation will quickly and accurately complete and submit all of the required documents.
- MyCorporation will send you the completed paperwork once your formation has been approved by the state.