How to Incorporate a New Business
Many small business owners elect to incorporate within their first year of operation. Incorporating a business provides owners with legal protections, additional credibility and tax flexibility. You can incorporate a new business by filling out the required forms and filing with your state's Secretary of State Office.
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Instructions
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Decide which legal structure is right for your business. There are several to choose from. A sole proprietorship is owned and operated by a single person, who assumes all responsibility for the business. A general partnership is owned and operated by more than one person, each of whom assume all responsibility for the business. A limited partnership has partners who invest in the business and share in the profits but who are not active participants in day-to-day operations, and a general partnership has partners who run the business and also share in the profits. A limited liability corporation is run by those who have a limited risk in the corporation but who enjoy the tax benefits of a partnership. A corporation is a business that is completely separate from the owner of the business in both a legal and tax sense.
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Find the form to request a charter with your state. Click on the link in the Resources Section to the U.S. government's website and select the link to your state's Secretary of State office. Once on your Secretary of State's website, click on New Business, then Incorporation Forms. Click on the link for the type of business that's right for you. Print out your incorporation forms.
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Write down several business name ideas and check whether they are available for use in your state. Any business name can only be in use by one business at a time in any particular state. On your Secretary of State's website, click on New Business, then click on Search Business Name, if that feature is available. Type in the names you're considering one at a time to determine if they are available. If a search feature is not available on your Secretary of State's website, call the Secretary of State's office directly; the phone number should be at the top of the website. Provide the representative with the business names you have in mind and they will look them up or explain how you can. Consider the available names and choose the one you feel works best for your business.
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Provide your state's Secretary of State office with information about yourself, such as your name, address, phone number and email address on the charter form. Provide the same information about anyone else who is incorporating the business with you. Provide the office with your business address, business phone number and business website, if applicable.
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Type information on the charter form about your business, such as the type of business you are creating, the name you are incorporating under, how many shares of stock you would like for your business, which shareholders have how many shares of the stock and the rights that each of your shareholders possesses.
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Prepare your articles of incorporation, indicating the type of business you operate and the goals of your business. This can be basic and one-page long. The articles of incorporation should list the type of business you are starting, basic information about how it operates and who its customers are.
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Create a set of by-laws for the business. By-laws are the rules by which the shareholders abide. This includes who the shareholders are, how many shares they own, the duties of each shareholder, when and where meetings are held and any other details about how your shareholders interact that you deem important.
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Have the charter form notarized. Take the form you filled out to a local notary public, sign the document in front of her and have her sign it and place her seal on the form. Notaries usually are available at banks and other institutions.
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Mail the signed charter, your articles of incorporation, your by-laws and a check for the incorporation fee (this will vary by state) to the address provided on your Secretary of State's charter form.
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Wait for the Secretary of State's office to accept your documents and send your certificate of incorporation in the mail.
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References
Resources
- Photo Credit business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com
