The Best Steps for Incorporating a Business
A business’s inception is no easy task. If you want to get your firm off the ground, there is a lot to accomplish. Including developing a business strategy, organizing marketing campaigns, and employing staff. Incorporating a business is a crucial step you shouldn’t skip. Even while it may seem confusing, you are only setting up a separate legal entity from yourself.
State-to-state variations in business incorporation procedures may exist. However, there are 6 general measures you should follow no matter where you are.
Step 1: Pick a Company Name
Choosing a name for your new business is an exciting first step toward incorporation. Customers should be able to remember, spell, and pronounce the name they choose with ease.
When selecting a business name, the essential legal criterion to remember is that you cannot incorporate your firm with a name that is already in use. To check the availability of names you’re interested in, contact your state’s corporate department.
In the age of SEO, you should also take into account whether a related online domain to your company name is available. It’s a good idea to see what’s available using the GoDaddy Domain Search.
Step 2: Publish Your Company
Keep in mind that you must register with any state where your company has a physical presence if you intend to incorporate your firm as a corporation. These locations could be workplaces, locations for in-person client meetings, or locations where a sizable amount of your business is generated.
To find out more information about the registration procedure, contact the Secretary of State’s office.
Step 3: Choosing a Location
Your company needs an address for formation purposes regardless of whether you intend to build a physical presence or will conduct the majority of your business online. The taxes you’ll pay can vary substantially depending on the state in which you do business.
Property tax and employment insurance tax is levied by every state. Not all states, meanwhile, levy personal income tax, sales tax, and corporate income tax. For instance, Delaware has a reputation for having business regulations that are beneficial to corporations, making it a popular state for incorporation.
Step 4: Choose a Corporate Entity
The next step is to choose the best business entity for you. The entity you select will have an impact on how you pay taxes and how different levels of government will deal with your business, similar to how your state location will.
State-level legal documents are typically filed with a state agency, like the Secretary of State, to create business entities. A registered agent is required to communicate with the state on your behalf.
The following five entity kinds are available:
- Single-person business
- Limited liability business Limited corporation S Corporation (LLC)
Step 5: Obtain an Employer Identification Number (Ein)
The IRS tracks firms with an EIN in the same way that it records people with Social Security numbers. The IRS portal makes applying for an EIN quick and simple. Remember, you should still register for an EIN even if you just want to operate as a sole proprietor or don’t intend to engage any extra staff.
Step 6: File the Articles of Incorporation
The articles of incorporation are a legal document that details important facts about your company, such as:
- Name of the company, Address, and Registered Agent
- Amount of shares that the company will issue
- Articles of incorporation are not required for partnerships or sole proprietorships.
- Questions to ask before forming a business
What Is the Price of Incorporating a Business?
The cost of incorporating a business depends on the entity you select and the location where you incorporate it. You can save time and money by using a service for entity formation.
Simply pay the tax-deductible fee set by your state. Each state will have a different cost. Depending on the plan you choose, our fees are for added-value business services at various pricing points.
Why Would a Company Incorporate?
The greatest approach to safeguarding your assets is to incorporate your company. When you establish your company as a separate legal entity, all obligations and liabilities are transferred to the corporation.
Will Incorporating Result in Lower Taxes for Me?
The incorporation of a business has several tax advantages. The opportunity to deduct expenses like health insurance, travel expenses, and other regular expenses incurred on behalf of your business is one of the key advantages. Additionally, losses are deductible from income taxes, which is beneficial in the early phases of a new corporation.
Consult a Specialist to Make Sure You’re Prepared for Success
The process of incorporating a business is a crucial first step for a small business, but it can be challenging. To assist with this, Your Part Time Accountant is always available.
Any doubt you may have regarding the business formation procedure, as well as any other queries or issues you may have regarding your small business, can be clarified during a quick and free tax savings consultation with our experts. We are eager to start the process with you!