Are You Starting a Corporation? A Step-by-Step Guide for Small Business Owners

Incorporating your business offers many benefits. You can look forward to tax advantages, increased credibility with customers and investors, personal liability protection, and more. But filing for a corporation can be confusing, stressful, and overwhelming. Here’s a step-by-step guide to help you through the process and make it easier.

Step 1: Choose a Business Name

Start by coming up with a name. It should be unique. Check if a business is already using it. Searching for available business names on your state's Secretary of State website also helps filter your options faster. Once you've chosen a name, register it with your state and receive a business name certificate.

Step 2: Determine Your Business Structure

What’s your business structure? Will you file for a sole proprietorship, LLC, partnership, or corporation? Each structure has its own share of advantages and disadvantages. Do your homework and choose the structure that best fits your organization’s needs.

Step 3: Choose a Registered Agent

If you turn your business into a corporation, you need a registered agent, a designated individual or company to receive legal documents on your company’s behalf. The registered agent must have a physical address in the state where the corporation is registered. You can be your own registered agent, but that comes with a few complications. For one, if you use your address, that will become a matter of public record, which can be problematic for your privacy. You can use a corporation service company instead. They’ll let you use their address.

Step 4: File Articles of Incorporation

File articles of incorporation with your state's Secretary of State to establish the existence of your corporation. The documents must include the name of your company, its purpose, the names of the directors, and the number of shares authorized. If you’re hiring a corporation service company, find one that also takes on these tasks, such as filing for corporation paperwork with the state. That will save you time and trouble.

Step 5: Obtain Business Licenses and Permits

You may be required to obtain business licenses and permits at the federal, state, and local levels, depending on the nature of your business. These licenses and permits ensure your company’s compliance with industry regulations and laws.

Step 6: Establish Corporate Bylaws

Corporate bylaws govern your company’s internal operations of your corporation and typically cover topics such as how directors are elected, how meetings are conducted, and how decisions are made. Establish these bylaws early on to ensure your corporation operates smoothly and efficiently. Having these bylaws in place can also prevent problems before they even start.

Step 7: Issue Stock Certificates

Issue stock certificates to the shareholders. These are legal documents representing ownership in the corporation and typically include the name of the shareholder, the number of shares owned, and the date of issuance.

Step 8: File Annual Reports

Corporations are required to file annual reports with their state's Secretary of State. You can ask the corporation service company to take care of these reports. They must contain information on your company’s current status, changes to your business structure, the names of your directors and officers, and the number of authorized and issued shares.

Are You Starting a Corporation? guide for Small Business Owners