How To Incorporate a Business

The steps to incorporating a business can be quite confusing, especially if you are an entrepreneur just starting out in the business world. While your path to incorporation will vary based on your specific situation, there are some steps all businesses must take to incorporate:

1. Understand incorporation. There are many laws governing incorporation. While it is beneficial for many businesses to incorporate, it may not be worth the hassle for other businesses. Many states offer different forms of incorporated businesses, so understand the types of incorporation available in your state. Your state government’s website should have this information. Understand the liability and tax implications of incorporating your business before you begin the process.
2. Begin the process. To begin filing for incorporation in your state, you’ll need to enter into agreements with other founders of the business, establishing who will hold what position on the board of directors. Then, file an application with the Secretary of State’s office to register the business name you wish to use.
3. File Articles of Incorporation and Bylaws. The next step is to prepare articles of incorporation. You can choose to handle this paperwork yourself, hire an incorporation service, or hire an attorney to do it for you. Even if you are handling the paperwork yourself, particularly at this stage it may be wise to consult with your attorney. If you do not use an attorney, you may miss small but important details, and it may take you longer to file for incorporation. As part of the process for incorporation, you’ll also need a set of bylaws. These should be formulated by the board of directors, and describe in detail how the corporation will run, as well as the responsibilities of shareholders and officers. Use broad but clear language to describe the scope of your corporation in the bylaws, giving your company the most possible room for later expansion.
4. Send in your paperwork, and get a Certificate of Incorporation. Once the Secretary of State’s office receives your paperwork, they will send you a Certificate of Incorporation. You and the other founders should sign this.
5. Begin operating as an incorporated business. Now it’s time to hold your first stockholders’ meeting. At this meeting, you should formally adopt your corporate bylaws and elect the board of directors. Finally, be sure to follow the rules of incorporation exactly, so that you will not be held personally responsible for corporate debts as the owner of a corporation. This includes keeping accurate financial records, keeping your personal finances separate from those of the new corporation. Once your business has incorporated, you’ll need to issue stock and file annual reports. Yearly meetings to elect new officers may also be required. Do all of these by the letter of the law, including keeping written minutes of the meetings.

While incorporating a business may sound complicated, and business laws are often quite complex, there are many ways to get help with all of this paperwork. The Secretary of State can provide some assistance, and there are many software programs and books to help small businesses incorporate.