How to Incorporate a Business

So you are wondering how to incorporate a business.

Incorporating a business is usually a wise choice, as corporations enable owners to escape personal liability for corporate debt.  In addition, incorporation reflects a strong, business image, allows for the anonymity of silent owners, and offers tax benefits in the form of tax deductions for health, life, travel and entertainment expenses.

Resources and Costs Needed to Incorporate

Learning how to incorporate a business is fairly simple, straightforward and inexpensive, particularly if you plan on limiting stock purchases to you, your partners and your associates. Incorporating a business usually means a few hours of paperwork and a small registration fee of less than $1,000. Plus, you will likely not need to the services of an attorney to complete and file your business incorporation.

Steps on How to Incorporate a Business

The following list details how to incorporate a business:

  1. Decide where you will file for incorporation. For most business owners, it makes the most sense to simply file for incorporation in the state where the business is located. Applying out of state usually doesn’t make sense for smaller businesses, as you will still need to pay state corporate income taxes in your state regardless.

If you company performs business in several states, it is usually best to simply apply for the incorporation in the state where you conduct most of your business.  You may also consider filing for incorporation in a state where corporate taxes are the friendliest.

  1. File your application with your state’s corporate filing office. You will need to file the paperwork either through the Secretary of State or the Corporations Commissioner, depending on the state in which you live.

You will first file an application to register the name of your corporation. The Secretary of State will make sure the name of your business is available for incorporation.
Next, you will prepare the paperwork, called the Articles of Incorporation. This preprinted, fill-in-the-blanks form essentially requires you to state the purpose of your corporation and the principal location of your corporation, and to list all of the information regarding the types and numbers of share of stock.

  1. Pay the registration fee to your state’s corporate filing office. This fee usually ranges from $200 to $1,000, depending in the state in which you live.

  2. Receive the Certificate of Incorporation for your corporation from the state’s corporate filing office. The Certificate of Incorporation will have all relevant information related to your corporation, including the name of the corporation, the purpose of the corporation and the state of the corporation.

  3. Sign the Certificate of Incorporation.

  4. Complete your corporate bylaws. Corporate bylaws generally cover information regarding the annual shareholder’s meetings, the members of the corporation who can vote during shareholder’s meeting, and the manner in which the shareholders are to be contacted regarding shareholder’s meetings. The corporate bylaws, although they do not need to be submitted with the Articles of Incorporation, are important for your corporation, as they are the place where key corporate decisions are recorded. 

Owning a corporation may be as simple as holding an annual shareholder’s meeting, yet the benefits are wide-ranging. Now you know how to incorporate a business – and enjoy its advantages!