How to Incorporate

Incorporation (abbreviated Inc.) is the forming of a new corporation. The corporation may be a business, a non-profit organization, sports club. This article focuses on the process of incorporation.

Difficulty: Easy

Instructions

Things You'll Need:

• Place
• Name
• Owner
• Registration

1. 
   Place

   Start by understanding that it usually makes the most sense to stay put and incorporate in the state where you do most of your business. If you form an out-of-state corporation, you will end up having to qualify to do business in your home state. You also will have to pay any state corporate income taxes levied in your home state for income earned there.

2. 
   Owner

   Incorporating is easy as long as you and close associates and family members will own all stock and none will be sold to the public.

3. 
   Name Check

   You need to check with your state's corporate filing office (usually either the Secretary of State or Corporations Commissioner) and federal and state trademark registers to be sure the name you want to use is available.
   A corporate name is generally made up of 3 parts: "Distinctive element", "Descriptive element", and a legal ending. All corporations must have a distinctive element and (in most filing jurisdictions) a legal ending to their names. Some corporations choose not to have a descriptive element.
   For Example: In the name "Tiger Computers Inc." the word "Tiger" is the distinctive element; the word "Computers" is the descriptive element; and the "Inc." is the legal ending.

4. 
   Registration

   You then fill in blanks in a preprinted form (available from commercial publishers or your state's corporate filing office) listing the purpose of your corporation, its principal place of business and the number and type of shares of stock. You'll file these documents with the appropriate office, along with a registration fee which will usually be between $200 and $1,000, depending on the state.

5. 
   Corporate Bylaws

   You'll also need to complete (but not file) Corporate Bylaws. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for an additional “special" meeting.

6. 
   Reporting after Incorporation

   Assuming your corporation has not sold stock to the public, conducting corporate business is remarkably straightforward and uncomplicated. Often it amounts to little more than recording key corporate decisions (for example, borrowing money or buying real estate) and holding an annual meeting. Even these formalities can often be done by written agreement and don't usually necessitate a face-to-face meeting.

Tips & Warnings

• Six tips to deduct your business startup costs: 1. Track your business startup costs. Startup expenses are things associated with setting up your business or investigating the purchase of an existing business. Among the items that count as startup expenses: - Doing an analysis of your potential market(s) - Paying for consultants - Buying initial supplies - Advertising your new business - Paying employees before the business opens 2. Track your organizational costs - State incorporation fees - Lawyers' charges for drafting incorporation papers - Initial accounting fees 3. Take an upfront deduction if you qualify.You can write off up to $5,000 in business startup costs and another $5,000 in organizational expenses in the year that you start a business. 4. Depreciate your initial equipment and furniture - the assets you buy for your startup can be written off. However, unlike supplies and other expenses, assets have to be depreciated. There are different rules for different assets. 5. Get a tax benefit for merchandise you first bought for yourself - how are you outfitting your first business office? Are you dragging some furniture out of your family room and converting the computer that used to live in the spare room into a piece of business equipment? 6. Have lots of startup costs? Put off what you can - if you're going to have to depreciate some business startup costs, it makes sense to delay purchases that can be put off until after your business opens. The same purchase made after opening could be written off in full in the first year instead of depreciated over 15 years.

Resources

• Incorporate or Form an LLC Now
• Establish your Corporation
• Start your Business Now
• Business Formation
• Incorporation
• Own Your Own Corporation By Sutton