Once business owners transition a unique idea into a marketable product or service, they are ready to begin the corporation formation process. As a business owner, there a several requirements you must be able to meet before you can begin the process. Guarantee that you have all required documents and materials to help you incorporate your business. When done effectively, setting up a corporation provides owners legal protection and can even save you money. If you are interested in the major requirements for the corporation formation process, continue reading this post.
Available Business Name
To start the incorporation process, you must choose an available business name. Within your chosen business name, you will often have to include some form of corporation designation. For example, adding ‘Limited, Incorporated, or Corporation” to the end of your business name. You additionally should consult your specific states list of restrict words. Certain states restrict against specific words that can be used in business names. Commonly, states prohibit starting businesses from using words like ‘Bank or Insurance.’ In order to successfully form a corporation, you must choose an available business name.
Drafted Articles Of Incorporation
You need to have a drafted copy of your articles of incorporation to incorporate your business. Some states have more stringent requirements about the articles context than others. However, most states require you to detail the specifics of your business within the articles. For example, the name of your business, various addresses, or the volume and class of stock you plan to issue. Consider the best states to incorporate a business in before submitting these articles. These articles must be prepared, signed by the incorporator, and then filed with your state’s secretary of state. In order to form a corporation, you need to produce your articles of incorporation.
Descriptive Corporate Bylaws
You are required to have corporate bylaws in order to form a corporation. Again, some states have more strict laws on bylaws than others. Some states do not even require corporations to submit bylaws at all. Corporate bylaws should outline shareholder duties, as well as the responsibilities of officers and directors. In addition, they should include a general description of how your business will ultimately operate. Create descriptive corporate bylaws in order to form your corporation.
You need to to obtain an Employer Identification Number, or EIN, from the IRS to incorporate your business. An EIN is the business equivalent of a Social Security Number for individuals. An EIN is needed for when you want to open a bank account for your corporation or file taxes. When you apply for an Employer Identification Number, several questions will be asked regarding your tax exemptions and implications. Because of this, it is often helpful to consult an attorney prior to submitting any finalized paperwork. Register for and obtain an EIN in order to incorporate your small business.
Clearly Defined Shareholders’ Agreement
Create and document a clearly defined shareholders’ agreement for the incorporation process. Shareholders’ agreements are not required, however, they significantly boost organization and designate responsibilities for your business. These agreements often depict the process to become a shareholder. At the same time, they list hoe existing shareholders can sell their shares in order to exit the corporation. In many cases, these agreements have been drafted to restrict who can be come a shareholder in a newly formed corporation. In order to form a corporation, you need a clearly defined shareholders’ agreement.
Incorporation can be a big move for small business owners. There are several steps you must follow if you are interested in how to set up a corporation. Due to its importance, it is crucial to strictly adhere to the corporation formation process. For the process, you are required to choose an available business name. You also need well defined articles of incorporation. Develop corporate bylaws in order to be accepted throughout the process. You also need a registered EIN with the IRS. Furthermore, you need to produce a clearly defined shareholders’ agreement. If you are interested in incorporating, consider the major requirements for the corporation formation process listed above.