Forming a personal corporation can provide legal and financial benefits for entrepreneurs and small business owners. Each state has slightly different laws regarding corporate filings, but the same basic rules apply to nearly all of them.
Name: The first thing you have to do when forming a personal corporation is select a name. Corporations all have unique names followed by either corporation, Corp., incorporated or Inc. If your first choice for a name is one which you suspect may be a very common name, you may want to provide a couple of options for your business name in case your first choice is already taken.
Location: Choose your corporation's location carefully. For most people, the best bet is going to be to incorporate in the state where you spend the bulk of your time; however, it is occasionally beneficial to incorporate in a different state which offers different tax or legal protections.
Directors: Who will be involved in your corporation? Will you run the whole thing yourself and be the sole employee? Will you run it jointly with your spouse or other family members? Decide before filing who will have control over the corporation, as this will enable the person(s) you name to take care of your business should you become unable to do so for any reason.
Articles of incorporation: The next step in setting up a personal corporation is to draw up your articles of incorporation. This document will outline the structure of your business and include the corporate name, directors, location, type of organization – for profit or non-profit etc.
File with the state: You will file your documents with the secretary of state where you want to establish your corporation. They will review the documents and will send back your certificate of incorporation.
Get your tax ID: Since forming a personal corporation sets up a separate legal entity, you will need to apply for a corporate tax ID number from the IRS. The forms are available on their website, or your CPA or attorney can help you.
Hold your initial meeting: After you get your certificate of incorporation back from the state, you will want to hold a meeting to elect officers and issue stock to members.
File your statement of officers and directors: When you form a personal corporation there are many details that need to be covered. Many states will require that you file a statement detailing the names and contact information for you officers and directors as well as your official agent. In addition, you will probably need to file documents detailing the initial issue for stock.
Maintain up-to-date records: When you decide to form a personal corporation, you are setting aside a portion of your life as a business. As such, it is important that you keep accurate records of that aspect. Keep a drawer in your desk set aside for official business documents and purchase a binder for your corporate records, stock certificates, and a corporate seal.
Forming a personal corporation can be a complicated and daunting process. There are do-it-yourself kits available, as well as services that can help you through the process. As with any legal process, before you form a personal corporation you should confer with your attorney and accountant to ensure that you are making the right moves to protect your assets and your business.