How to Incorporate Your Small Business in 7 Steps
The incorporation process made easy for small business owners
When you start a small business, you need to decide how to structure it. Each structure has its own set of pros and cons; the best format will depend on your business, location, and specific needs.
If you are unsure what structure is best, review the advantages and disadvantages of the U.S. Small Business Administration website.
If you have determined that a corporation is the best structure for your business, here is a review of some of the benefits of forming a corporation -- follow these seven steps to becoming incorporated. You should always consult an accountant and/or an attorney if you have questions about the process.
Choose Your Business Name
The first step is choosing a name for your business. An effective business name should fit what you do, how you do it and the audience you are trying to reach. It should be something people will understand and remember.
Once you create a business name, you should check with your state's corporate filing office as well as federal and state trademark registrars to see if it's available. It's also a good idea to come up with an alternate name in case your first choice is not available.
Identify Your Location
Next, you need to select a state as your headquarters' location. This doesn't necessarily need to be where you live or even where you expect to do the majority of your business, although sticking with your home state may be an easier process.
Some factors to consider when choosing a state for incorporation include the cost to incorporate, taxation and corporate laws.
Select the Type of Corporation
Now, it's time to decide what type of corporation you will form. You can incorporate your business as a C Corporation, an S Corporation or an LLC. Each of these types has its own advantages and disadvantages, so you should explore the explanations of each corporation type and consult a tax accountant for advice.
Process and File the Paperwork
The final step of incorporation involves submitting the articles of incorporation you prepared in the last step to the state, along with the required registration fee.
You have the option of filing the paperwork yourself, through your attorney or by using a third-party service. You should choose the option that you are most comfortable with and the one that works within your budget.
Choosing the structure of your business is not an easy or small decision to make. Make sure you take the time necessary to gather all of the information you need to make an informed decision.