How to Incorporate a Small Business

Incorporating a small business provides legal protection for the individuals who are running the business in the case of a lawsuit. Incorporation can also provide certain tax benefits. It is not difficult to incorporate a small business, and you can do it yourself with a little bit of guidance.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Filing fee

1. Decide in which state you want to incorporate. Many people choose to incorporate in the state where the small business will operate. However, some people choose to incorporate in the states of Delaware or Nevada, both of which have favorable corporation laws.
2. Visit the website for the secretary of state’s office for the selected state. Most secretary of state websites will provide guidelines for the incorporation process. Become familiar with those guidelines.
3. Conduct a corporate name search. You need to select a unique name for your small business’ legal name. Most secretary of state’s websites enable you to search a database to determine if the name you want for your small business has already been taken.
4. Decide what type of corporation you want to form. A C-Corporation is the traditional type of corporation. An S-Corporation is often preferred by many small businesses because it avoids a “double tax.” A Limited Liability Company (LLC) is also attractive for many small businesses.
5. Write Articles of Incorporation for your business. Download the correct form from the secretary of state’s website and complete it. You will need to have selected a name for the corporation, identify the registered office (the place where official mailings should be sent) and the name of the registered agent.
6. File the Articles of Incorporation with the secretary of state. Be sure to include the filing fee. Follow the directions on the state's website for how to file.

Tips & Warnings

• If you choose to incorporate in another state, you will need to hire a registered agent to receive official mailings if you do not have an office located in that state.
• Be sure to research the differences between C-Corporations, S-Corporations and LLCs to decide which type of corporation will best meet the needs of your small business.
• It might take several weeks to hear back from the secretary of state’s office, so be patient.
• Incorporating your small business is only the first step. Be sure to research the requirements for corporate record keeping in the state where you incorporate your small business.