Have you ever wondered how to incorporate yourself and your business? There are many potential benefits associated with incorporating your business and creating a separate business entity for your firm. And, with this in mind, we have outlined some of the key things you need to know about incorporated businesses today. Hopefully, this will help you make the right choice for your business overall.
So, why leave things to chance; find the most effective solutions for your business overall with help from our team today. Read on to learn more about incorporating your business and why this might be a good choice for your business.
What is Business Incorporation?
Before we can look any further, we need to consider what business incorporation is. During the incorporation process, you create a separate legal entity for your business. In turn, this can offer many potential benefits for your firm and its trading efforts; we’ve outlined a few of these ideas as follows to help you determine whether incorporating your business could be a good option.
The Benefits of Business Incorporation
There are many potential benefits that business incorporation might provide. Some of the most notable of these include the following points:
- Once your business is incorporated, the owners’ assets may be protected against company liabilities and expenses. By contrast, an unincorporated business model may be liable for business liabilities incurred due to the firm’s activities.
- Incorporated businesses are much easier to transfer to other parties, which can make it simple for business owners to sell their business if they’re ready to cash in the earnings.
- Alternatively, incorporated business owners are able to sell stocks and shares if they aren’t entirely ready to sell the whole business – offering a new income opportunity for firms.
- For the business owner themselves, incorporating the business can lead to more generous tax rates
While incorporating your business may also be other benefits, these are often the most prominent. As such, before deciding whether to incorporate your business, you should absolutely consider the above points. However, it’s crucial to be aware that, once you have incorporated the business, you will no longer be the owner specifically; instead, you will own shares within the business.
It may also be worth considering that your income may be liable for double taxation since your newly incorporated business will also have to pay income tax.
How to Incorporate Your Business
At this point, it’s crucial to consider how your business can incorporate itself. Though this can sound like a somewhat nerve-wracking process, incorporating your business doesn’t have to be an impossibility. As such, we have outlined some of the key steps in the process you should follow below.
#1 Choose Your Business’s Information
The first step in the process to incorporate your business is to decide on a business name and location. If you are considering a trademark for your business, this is also the time to consider it; you will need to check that the trademark is available through the United States Patent and Trademark Office.
#2 Creating Governing Documents
All incorporated businesses need to hold governing documents; these are known as bylaws for corporations and operating agreements for LLCs. Fortunately, the role of the governing document is internal. As such, they do not need to be officially filed. Nevertheless, creating your firm’s governing documents is a critical step to take, allowing your business to choose effective strategies for issues such as profit distribution, dissolution, disputes, and the like.
The governing documents are most vital for incorporating partnerships; however, even incorporating sole proprietors should still spend some time creating effective governing documents to outline the business’s strategies.
#3 Filing Paperwork
Once you have created your new incorporated business’s governing documents, you will need to file the relevant paperwork. If you have an expert by your side, this process will be much easier; however, if not, you can source the relevant articles of incorporation as a PDF form online. Helpfully, these documents also come with handy guides attached, which makes it easier to fill them out and submit them effectively.
Downloaded articles of incorporation can be submitted online, and this makes online filing one of the most popular modern methods; however, you should always check the specific requirements for your state. If you have any questions about this process, calling your state’s agency can potentially provide the answers you need; alternatively, partner with an incorporation expert to ensure you’ve got professional support to hand whenever you need it.
Generally speaking, the paperwork for your newly incorporated business will need to reference:
- The business’s goals and purpose
- Company name and address (as defined earlier)
- The agent’s name and address – always ensure you’ve partnered with a professional, registered agent as part of this
- Contact information for the business’s officers and/or directors or managers
#4 Funding Meeting
Launching an incorporated business required funding – and as such, you will need to host a funding meeting after filing the paperwork. During the meeting, you’ll need to cover numerous different points, such as the business’s assets, the value of each person’s financial contributions (and their associated ownership), and the like. This information should also be referenced in the governing documents.
During the funding meeting, you will need to provide membership certificates to any investors who have contributed to the project (for LLCs). Meanwhile, for corporations, the investing parties should be provided with stock certificates. In addition to these, you will also need to offer copies of initial passed resolutions and the fully signed governing documents.
#5 Employer Identification Number
Another aspect you will need to consider when incorporating your business is obtaining an Employer Identification Number (EIN); at the same time, you will also be provided with a business tax ID number. Even if your business doesn’t plan to take on any more employees, it will nevertheless still need to obtain an EIN.
#6 Creating a Corporate Bank Account
Once you have obtained your Employer Identification Number, you will naturally want to consider setting up a new corporate bank account. Not only does this help support the legitimacy of your firm and ensure the legal distinction between the owner(s) and the business, but a corporate bank account is also an effective way to make taxation easier at the end of the financial year. As such, it could absolutely be a valuable solution to consider.
Implementing this strategy early during the planning process is a good way to keep things running effectively overall. You’ll definitely be thankful at the end of the year when it comes to filing taxes – or, more likely, your accountant will definitely thank you for the effort.
#7 Securing Licenses
As a final step before you can begin managing your newly-launched incorporated business, you will need to secure permits and licenses for the brand. For example, if you have created an incorporated business that handles food, you will need specific permits to enable your business to handle and prepare food; this will likely vary from business to business, depending on your model and operating structure overall.
Don’t Forget to Get Professional Business Support
There are numerous reasons why you might want to incorporate your business. But, to make the most of the opportunity, we highly recommend getting professional support from a business incorporation expert.
Indeed, partnering with a professional business incorporation team can offer many potential benefits for your firm. Not only can professional support help ensure that your paperwork is completed correctly, but it’s a sure way to make the process a little easier. If you have any questions, your business incorporation advisor will also help with these, giving you quick answers to any queries you might have.
In short: if the thought of incorporating your business feels a little overwhelming, getting professional support from an expert advisor may help. So, why leave things to chance – make sure you’ve got expert support to hand to make the process a little easier instead.
Incorporating your business can offer numerous great benefits, and we’ve outlined a few of the main perks today to help. After all – incorporating your business can offer so many benefits. And, with this in mind, it’s important to consider whether incorporating your business could be a good option for your own trading needs. So, why not give it a try; you might just find that incorporating your business could be the ideal solution you’ve been looking for.