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[F500]For Incorporating Your Business

by Michael D Cook, Mic

The first step is to check with your state's corporate filing office (usually either the Secretary of State or Corporations Commissioner) and federal and state trademark registers to make sure the name you want to use hasn't already been used. File the Articles of Incorporation (also called a Charter, Certificate of Incorporation or Letters Patent).

Fill out a preprinted form (available from commercial publishers or your state's corporate filing office) listing the purpose of your corporation, its principal place of business, and the number and type of shares of stock. You'll file these documents with the appropriate office, along with a registration fee which will usually be between $200 and $1,000 depending on your state. Determine if you want out-of-state, in-state, or foreign incorporation. Most small and medium-sized businesses incorporate in the state where the majority of their business is conducted.

Next, you need to select your Corporation's Name. A corporate name is generally made up of 3 parts: Distinctive Element, Descriptive Element, and a Legal Ending. All corporations must have a distinctive element and a legal ending to their names. Some corporations choose not to have a descriptive element. In the name "Cottonwood Furniture Inc." the word "Cottonwood" is the distinctive element; the word "Furniture" is the descriptive element; and the "Inc." is the legal ending. The legal ending indicates that it is a legal corporation and not just a business registration or partnership. You can choose from the following words: Limited, Incorporated, and Corporation or their respective abbreviations: Ltd., Inc, and Corp.

You can contact the Secretary of State's office to obtain the forms and get help with filing an application for registration of the name under which you wish to incorporate your business. After you file, the office will let you know if the name has been taken.

Prepare articles of incorporation for your business following instructions from the Secretary of State's office. The office will send you a certificate of incorporation, which will include the name of the company, the purpose for which it is being formed, the location of the company, and other basic information. You and all required individuals must sign the certificate. The number of legally qualified individuals required to sign varies from state to state.

Enter into a preincorporation agreement with the co-founders of the business, establishing who will serve on the first board of directors, who will buy stock, how many shares and at what price. You might also need to complete (but not file) Corporate Bylaws. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for any additional meetings.

Adopt corporate bylaws and hold a meeting to elect a board of directors. Send an agenda to shareholders before the meeting to let them know what issues (and board candidates) they will be voting on. Once the board is formally elected, any documents created in connection with the preincorporation agreement need to be adopted.

Incorporating your business has several advantages over the other common business entities that you have to choose from. This article will explain seven of the advantages of incorporation, and maybe one or more of them will be just what you're looking for as you decide whether to incorporate your own business or not.
It's pretty much a given that hard work and a little luck goes a long way towards helping you succeed. But a little knowledge, especially when it comes to properly setting up your business, will help you stay successful.
While most business people give lots of thought to location, store dcor, hiring employees, customer service, and management issues, choosing the proper business structure doesn't get the attention that it deserves.
Many entrepreneurs don't realize this, but the organization type they choose can often determine the difference between success and failure, especially in today's litigious society. If you have a desire to succeed, you need all the advantages you can get. High on the list of safe bets is incorporating your business.
Incorporating, while definitely not for everyone, offers several distinct legal and financial advantages over the other types of entities.
Here are seven advantages of incorporating your business
1. Asset protection
If you operate as a partnership or sole proprietor, you're subject to virtually unlimited personal liability for lawsuits or business debts.
If you ever go out of business or get sued, your personal assets including your home, vehicles, jewelry, bank accounts, etc. are all up for grabs.
This is generally not the case when you incorporate. When you incorporate you're responsible only for your investment in the corporation.
In fact, the limited liability feature of a corporation, while not a rock solid guarantee, is for sure one of the best reasons for incorporating.
2. Corporations are usually much easier to sell and are more attractive to prospective buyers than either a partnership or sole proprietorship. This is due to the fact that a new buyer won't be held personally liable for any wrongdoings or missteps on the part of the previous owner.
For example, if someone buys a sole proprietorship, the new owner can be held personally liable for any mistakes or legal violations on the part of the previous owner, even if the new owner had nothing to do with it! But with a corporation, this is usually not the case.
3. Tax savings
Incorporating your business provides several tax advantages that don't exist for other business entities.
When you incorporate, you create a new, separate, and distinct legal entity. Because of this, many transactions can be structured between you and your corporation to save a lot of money on taxes.
One example: If you own a building, you can rent office or warehouse space to your corporation and claim depreciation and other tax deductions for it. Your corporation can in turn claim the rental expense. You can't do this if you're a sole proprietor or a partner in a partnership.
4. Privacy and confidentiality
Incorporating is a great way to keep your identity as well as your business affairs private and confidential.
If you want to start a business, yet remain anonymous, a corporation is the best way to do it. States such as Delaware, Florida, and Nevada offer substantial privacy protection for corporations and their shareholders.
5. Easier to raise capital
When you want to raise money through loans or investment, being a corporation can make finding and getting the capital you need much easier.
You can simply sell shares of stock if you want to take on investors. If you need a loan, a corporation adds clout when dealing with lending institutions.
6. Perpetuity
As mentioned above, when you incorporate your business you create a new, separate, and distinct legal entity. This separate and distinct entity (the corporation) can live on almost forever regardless of what happens to the shareholders, directors, or officers.
This isn't the case with partnerships, sole proprietorships, or even limited liability companies. The loss of the owner or a partner will either end the business altogether or throw it into a maze of red tape.
7. Increases credibility
In today's world, most people feel more confident and secure dealing with a corporation as opposed to other business entities. Having CORP. or INC. after your company's name adds an instant air of credibility and professionalism to your business dealings.
Always be sure to consult with your business advisor and/or attorney before evaluating any important legal or financial decisions.

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Both Michael D Cook & Katie George are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

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