Business incorporation can be confusing. There are too many intricacies involved in the process that lay people off and force them to hire an attorney. For a new business it may seem a bit overwhelming. This article will walk you through the process from start to finish so that you can become more familiar with the process and decide if a business entity is right for you.
The first thing you need to do is determine if your business is going to be considered a sole proprietorship, a partnership, a C corporation, or some other type of business entity. Your state should be aware of which business entity structure is best for your state. Once you know what the process entails, you will have a better idea of what your options are. I recommend using a business attorney to help you get started. It is vital that you take time to become as informed as possible so you can make an informed decision about your company’s status.
Once you know your business entity identification, it is time to set up the necessary paperwork. You will need to obtain business permits and filings. In most states, you will also need to report any income you make and any other expenditures you make. You might also be required to issue stock options to your partners or create a board of directors.
The first thing to consider when forming a business entity is what type of business you intend to have.
Will you sell a product or provide a service?
Once you have determined what type of business you want to start up, the next step is to decide where you will incorporate.
Many small business owners choose to incorporate in their home state, and only need to do a limited amount of business there. In this case it would be best to simply choose a business name with an S corporation, for example, and incorporate there. The next thing to consider is whether you are going to need to register the business entity with the secretary of state, and whether you will need to obtain any other registrations from the state.
Most states require S corporation filings, although some require sole proprietorship filings as well. It is important to make sure that you comply with all filing requirements for your state before incorporating. Finally, once you have completed the process of formulating your business entity identification, you must research your business carefully to determine whether you have any assets or liabilities. If you do not have sufficient knowledge about your business, it would be better to seek the help of a qualified accountant or attorney.