There has been a lot of talk recently about
whether or not a corporation can be considered a person. While pundits debate
those points, the courts have already decided: a corporation is a legal entity
that can enter into lawsuits, be taxed and buy land just as any individual
will. As a small business owner you might soon discover there is very little space
between you as a person and your corporation. The biggest advantage of
incorporating is that it can protect your personal assets. Those should always
be kept separate from your corporate umbrella. The following are 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.
