Despite dismal local economy, your small business is thriving well to a point that you need new business action plan to push your business’ growth to the roof. At this stage, you might want to start thinking about incorporating your business.
I understand that the word “incorporation” shivers you a bit – More paperwork and due diligence.
Nevertheless, you can’t deny that incorporating your small business brings many benefits to your business – One of the top reasons why small business owners incorporate their business is limited liability (hence the name, LLC – Limited Liability Company.)
Incorporating your business is not trivial. You only need to follow a certain process that I will explain a bit to you in a while – Here’s how.
Prepare your business for incorporation
First and foremost, decide on your primary business premise. If your business operates in one state, you will need to incorporate yours in the state. If you do business in multiple states, you need to decide which state you will incorporate your business in. Obviously, you want to incorporate in a state that is the most business-friendly (read: Supportive tax regulations and laws) of all.
Secondly, name your corporation. Make sure your chosen name has not already been registered and/or patented. Your chosen name would need to be registered as DBA (Doing Business As.)
Choose your filing agent
decide who will help you file your corporation. Of course, you can DIY all the paperwork, but you wouldn’t want to trial-and-error at this stage – I highly recommend you to hire a filing agent. The agent must live in the state where you incorporate your business, and he/she may be an attorney or incorporation services agent.
Develop your corporate structure
You need your corporate structure ready. You need to determine how the company stocks will be spread among shareholders (you still need to do this even if you are run a one-man show,) along with elaborating shareholders’ rights. Have your shareholders agreeing on the structure in writing before filing in your incorporation paperwork.
Develop a set rules for the board members to follow. A.k.a. corporate by-laws, the set of rules will regulate how board members will be elected, their duties, board meetings scheduling, and other details.
Ready to File
Obtain an Employee Identification Number (EIN.) EIN’s role is pretty much similar to your SSN (Social Security Number,) but for your role in your business.
Form a board of directors. You need to determine who’s who that will sit as the member of the board of directors.
Double check your incorporation paperwork. This is the last step before you are ready to file for your corporate registration.
As I recommend above, you should highly consider hiring a filing agent. Better yet, you can actually incorporate your business online. The online incorporation sites are generally offering you printable paperwork, detailed instructions, and recommended agents that can help you incorporate your business.
Small business incorporation
Image by Dwonderwall.