What Are the Steps to Incorporate a Business?
Incorporating a business protects an owner from most legal liabilities associated with that business. It may also make it easier to raise investment capital and for the ownership of the business to be transferred. Incorporation, however, also entails expenses and extensive record keeping. Investigating the steps necessary to incorporate a business will help an owner decide if it is right for a particular company.
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Types
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Investigate the two types of corporations: C and S. C corporations work well for larger businesses and those looking for substantial capital, but they are taxed at both the corporate and individual levels. S corporations are similar to sole proprietorships or partnerships but have more legal protection for the owners.
Location
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Decide on the state in which the business will be incorporated. Some states lure corporations with lower fees and taxes. Beware, though, that businesses are treated as "foreign" entities by any state other than the one in which they incorporate.
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Inquire
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Contact the state/states in which the company will be doing business. Ask about taxes, special licenses and workplace rules. Determine how "foreign" businesses are treated by the state.
Protect
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Apply for trademarks and domain names associated with the business. File for a "doing business as" (dba) if company operations take place under a name other than that of the corporation. File all necessary incorporation paperwork with the secretary of state's office. Open a corporate bank account and keep detailed records of all transactions.
Warning
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Many companies claim they can help make it easier and/or quicker to incorporate a business. However, these companies often charge substantial fees for these services. Carefully investigate any company before using it to incorporate. If you feel you need help with the incorporation process, hire a lawyer who specializes in the field.
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