How To Incorporate A Small Business

2007-03-08 10:33:40

( Business )



It may seem a daunting task, but to incorporate a small business is easy. It’s a fairly simple process, and all you need to know are the basics.

Why Incorporate A Small Business

The best reason to incorporate a small business is to minimize personal liability. Under certain conditions, stockholders’ liability is limited.

Additionally, if you are seeking equity capital, you should seriously consider shifting to the corporate form.

Choose Your Location

Incorporating in the state where you operate makes a lot of sense.

If you decide to incorporate a small business outside of your business location, you would need to qualify the business in your home state anyway.

The costs are practically the same as incorporating in your home state, but you will have to pay any state corporate income taxes charged in your home state for any income earned there.

The more flexible corporation laws in certain states favor large corporations with publicly-held stocks, not the small business forms.

Filing Articles of Incorporation

To incorporate a small business, the first step would be filing articles of incorporation.

You may use the standard form which is available in most states. You can get copies of the form from a designated state official. In some states, local stationers offer such forms as well.

In filing the articles of incorporation, you need to supply the following:

- The corporate name of your small business
- The purpose for which your business was formed
- Length of time (number of years or perpetual) for which your corporation is formed
- Names and addresses of incorporators
- Address of your registered office in the state of incorporation
- Maximum capital stock and the types of stock you will be authorizing
- Capital at the time of incorporation
- Regulations of your corporation’s internal affairs
- Names and addresses of the board of directors

Your First Stockholders’ Meeting

Once the articles of incorporation are in place, the stockholders should meet to adopt the corporate bylaws and elect the board of directors.

The directors will, in turn, elect officials who will be responsible for the operations of your new corporation. In a small business setting, the directors are often elected as the officers.

This completes your incorporation process.

Getting Help

If you need help to incorporate a small business, finding an online incorporation service may be the most cost-effective solution. At minimal cost to your organization, an online incorporation service will help you incorporate your small business quickly and efficiently.


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