A corporation can be a great way to increase your company’s status and credibility, and provide certain tax, legal, and financial benefits. Knowing how to incorporate your business successfully and what the steps to becoming a corporation are can be daunting and complex. The good news is that it doesn’t have to be. In this article, we’ll give you an overview of the basics of incorporating your business, so you won’t feel too overwhelmed as you move through the process.
Steps to Becoming a Corporation
There are several steps involved in becoming a corporation. Each one is necessary to comply with the legal requirements and receive any potential benefits.
Step 1: Choose a Business Name
The first step in incorporating your business is to come up with a unique business name. You’ll want to make sure that your chosen name isn’t trademarked, copyrighted, or otherwise taken by another company. You should also double-check the availability of web domains, so your business can have its own website.
Step 2: Appoint Directors
In order to become a corporation, you must appoint at least one director. The director will have responsibilities like holding board meetings and meeting compliance and reporting requirements.
Step 3: Create and File Articles of Incorporation
Once you’ve chosen a business name and appointed directors, the next step is to create and file the Articles of Incorporation. These are the documents that will serve as a public record of your corporation.
Step 4: Issue Shares and Hold Shareholders’ Meetings
Once the Articles of Incorporation are filed, the next step is to issue shares and hold shareholders’ meetings. This is done to give the shareholders a say in how the corporation is managed and how decisions are made.
Step 5: Create Company Bylaws
Once the Articles of Incorporation and the shareholders agreements are signed, the next step is to create a set of company bylaws. This is the document that outlines the rights and responsibilities of the corporation, its shareholders, and its directors
Step 6: Get an Employer Identification Number (EIN)
Once all these steps are complete, you’ll need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is an identification number used to track and report the corporation’s taxable income.
Step 7: Establish an Operating Agreement
Once you have all the legal and financial pieces in place, the next step is to create an operating agreement. This document outlines the rights and responsibilities of each member and how the business will be managed and operated.
Step 8: Register for Business Licenses and Permits
The final step in the process is to register for the necessary business licenses and permits. Depending on the type of business you’re running and where you’re located, you may need to obtain these licenses and permits from the state, local government, or other agencies.
The steps that must be completed to become a corporation can seem complex, but they don’t have to be. By taking the time to familiarize yourself with the process, you’ll be better equipped to incorporate your business and reap the potential legal, financial, and tax benefits. Good luck!
