Incorporating is important because it reduces liability to your personal life.
Setting up your business as a Corporation means that your business exists as a separate legal entity; protecting you from any lawsuits or debt incurred by your business. Taxes can also be an added benefit of setting up as a Corporation because oftentimes they are taxed at a lower rate and have better tax benefits.
Here are 7 steps to starting a Corporation:
1) Choose a Corporate Name
The name of your Corporation should be different from other entities already in existence and should include “Corporation,” “Incorporated,” or “Company,” in the name.
Abbreviations are acceptable including “Corp.,” “Inc.,” or “Co.”
2) Select a State to Incorporate In
Keep in mind that setting up a Corporation in your home state is less expensive than creating an out of state Corporation.
3) Select a Corporation Type
There are 3 types of Corporations:
- S corporation
- C corporation
A Business owner is not liable for the debt or obligations the business incurs under an LLC the business is also taxed at the owners personal tax rate. This is great for small business’ who want liability protection and flexibility with taxes.
In an S corporation the shareholders are taxed instead of the business.
A C corporation is owned by shareholders, who are fully liable for the debt and obligations incurred. The company can be taxed twice; when it makes profits and again when shareholders are given dividends. This type of corporation is ideal for startups and those that raise funds from investors.
4) Determine Company Directors
An “Incorporator’s statement” showing the names and addresses of the initial directors must be filed by the person who signed the articles.
5) Choose Your Share Type
Share types include common and preferred stock.
6) Obtain Certificate of Incorporation
Through your local state office or business retailer you can obtain a Certificate of Incorporation.
7) Process and File Incorporation
Setting up a corporation can be a daunting task. We offer corporation set-up services, so that you don’t have to go through the steps yourself. We can take charge in determining your type of corporation, creating the articles of your corporation that need to filed with the State, and much more. If you’re a foreign corporation, we also offer set-up services so that you can open your own U.S. subsidiaries.
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