If you finally decided to incorporate yourself or a business that you own, be sure you go about it the right way. There are quite a few things that need to be taken care of before you can start listing yourself as an incorporated company. Bypassing any of these steps will surely end in disaster either legally or financially. So, even after reading this guide, follow up with research. Every state differs in its process to become incorporated so please don’t accept a simple guide as the be all end all of information.
1. Name: Obviously the first thing you’re going to need to do is decide on a name for your corporation. It can be anything you want (as long as it follows the state’s guidelines for what corporation names can be) as long as there is not another company with the same or similar name as your own. You can’t just name your company Dominos Pizza or McDonalds if there are already companies with that name that have registered. Once you find one that isn’t taken, call the local officials and have them reserve the name for you so you have time to get the rest of the materials together to incorporate.
2. Type: You’ve now got a name for the company, the next step is to determine what type of corporation you want to form. The type of corporation you form dictates how many shareholders there will be and based on that, the number of people that will have stock in your company. You can have unlimited shareholders if you wish, but that isn’t always advisable. If you’re not looking to sell shares in your company, there are also corporation types that let you just incorporate a certain group of people, such as a conglomerate of doctors forming a practice.
3. Articles of Incorporation: This is the step where all of the paperwork begins. You start by filling out basic paperwork that tells the state who you are and what you’re doing. You will have to know how many initial shareholders you plan to have, how much each share is worth, who is incorporating the business, and many other things. These papers let the state know everything that is involved with your business. Without these papers, you can’t form a corporation.
4. Lastly: The final steps are to create corporation bylaws that dictate to the other owners of the company how things will be run. The most important thing to take from the bylaws are how voting will be conducted. The state doesn’t require that you file these papers with them but they do require that they be made as part of the incorporation process. After a few more hoops, you should be good and ready to go. Congratulations on having your first corporation!