Getting Incorporated: Important Steps and Tips on Incorporating Your Company
In an earlier blog post we reviewed the benefits of incorporating your small business and the implications that may have. The biggest advantage of incorporating your business is that it can help protect your personal assets, which ideally should always be kept separate from your corporate umbrella. Assuming you have made the decision to incorporate, the following is a list of steps and tips to follow as you head down the road of incorporating your company.
1) Decide Where You’ll Incorporate
The three options for business incorporation would be within your own state or province, within your own country or in a foreign country. Most small businesses start out by keeping it simple and incorporating within their own region. However, it is worth exploring other options if for no other reason than the possible tax breaks you might receive. Once you are incorporated all the general laws will apply no matter where your company chooses to file the paperwork.
2) Decide Your Board of Directors
The next step is to create a pre-incorporation agreement. This agreement will establish who will be on your board of directors and in what position. It will also have you establish the value of your company stock. Note that these stock shares have more to do with position than actual trading. For instance, when Facebook started up, investors and employees were offered stock options as part of their compensation. Years later, Facebook is finally going to go public and those original stock options will hold true value based on what the market decides.
3) Decide Your Company Name
You’ll next have to file an official registration name for your corporation. Before doing this, you’ll have to research your name to make sure no other corporations that have the same title. You could simply file without the research but if your company name is rejected then you’ll have to start all over again.
4) Decide on Your Articles of Incorporation
This will become the bulk of your incorporation paperwork and is not something you’ll be able to handle without a corporate lawyer. The procedures for creating these articles will be based on the rules and regulations that have been established in the region where you’ll be incorporating. When these articles have been filed, you’ll be sent an official certificate of incorporation. Once you sign that, you’re an official, fully recognized corporation.
Along every step of the way, there will be filing fees and legal costs you’ll have to pay out. There are some law firms that specialize in filing incorporation papers and offer affordable packages for start-up business. After you’ve completed all of these incorporation steps, you’ll need to hold your first board meeting and set up your own bylaws.
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