Can You Incorporate Yourself?
All 50 states, including the District of Columbia, allow corporations to form with a single owner. A single person incorporates a business in the same way that a large company incorporates. To incorporate your business, you have to file incorporation documents with the secretary or department of state where the company operates.
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Significance
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When you incorporate your business, it becomes a distinct legal entity that has a separate life from yours. This means when the company incurs a business obligation, you do not have a personal obligation to pay the debt or liability, unless you gave a personal guarantee on a business loan. In addition, your personal creditors cannot take assets away from your business to compensate for your personal liabilities. When you incorporate your business, it has a perpetual existence, which means it will exist forever, regardless of who owns and operates the company at a specific time.
Considerations
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You have to select a business name for your corporation. This name must not be in use by another entity in the same state where you incorporate. Check name availability by calling the secretary or department of state, or you can conduct a name availability check online using the secretary or department of state website. The word "corporation" or "incorporated" must appear in the legal name of your corporation. You must select yourself as the company's director, and you can hold all officer positions in your company. This means you will act as the company's president, vice president, treasurer and secretary.
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Incorporation Paperwork
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You can get fill-in-the-blank articles of incorporation from the secretary of state website. For instance, if you intend to incorporate in Illinois, print articles of incorporation from the Illinois secretary of state website. To complete the articles, you must provide the legal name and street address of the company, as well as the name and physical address of a registered agent. The street address of the registered agent indicates where your company's lawsuit documents are delivered. The number of shares your company can issue and the purpose for forming the corporation must appear in the articles. Your signature must be included in the articles, along with the appropriate filing fee at the time of submission. The costs to file articles of incorporation will vary from state to state.
Warning
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As a corporation, a number of formalities exist that you must follow. For example, you have to hold at least one meeting and record minutes from each meeting, as well as prepare and file annual reports with the state of incorporation. If you fail to keep up with the required formalities, you will lose your status as a corporation. In addition, you are subject to double taxation when you incorporate your company. This means you have to pay taxes on the company's business profits on the entity level. Your company's profits are taxed at your corporation's applicable income tax rate. The second tax occurs when you take dividend payments from your corporation. Any dividends you receive from your corporation must be reported on your personal income tax return. Dividends from your corporation are taxed at your personal income tax rate.
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