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5 Inexpensive Things to Know Before Incorporating a Business
If you are in the process of starting your own business, probably you are also thinking about incorporating the company. Corporations can own properties, sign the contracts, maintain bank accounts, and even file lawsuits. But if your business is too small, you should think before incorporating your business.
The main reason for most of the persons to incorporate the business is to limit personal liability when compared to the companies obligations. The ownership of the corporation is mostly maintained in shares, and it is easy to transfer or sell the shares from one owner to another. If you are planning to attract outside investors, then incorporating is the best choice.
However, it is very costly to set up or dissolve a corporation. You need to keep more records, books, or file more taxes for a corporation. Basing on the individual situation, you may need to pay more or fewer taxes after incorporating your business. Always take the advice of an accountant before proceeding for incorporating your business.
Once you have learned about the pros and cons of incorporating your business, know about the rules and regulation of each state. Even though the states have different rules, some rules are standard for most of the states.
1. Name of the Business
Giving a name to a business is the basic rule to be taken care of, and you should follow certain rules and basic guidelines.
The name should be different from other business name entity registered in the state where you are about to start the business. Most of the states have online search tools to know about the names.
You are restricted to use some of the obscene words in your business name and also words like “bank” unless you have a financial institution.
The name of the business must end with “Company,” “Corporation,” “Incorporated,” or abbreviation of those words.
2. Address of the Business
The address of a business is simply a place where your business can receive the mail. Using a single address with P.O Box is also acceptable.
3. Names of the Decision Makers
Your articles of incorporation must mention all the names of the people who are responsible for the decisions made in the company. Usually, there are two types of decision makers, Incorporators and directors. An incorporator is a person who is responsible for preparing, signing, filing of the articles of incorporation, and choosing the board of directors for the company. The duty of the incorporator is to complete once the rules are made and the directors are chosen.
The directors have to define the corporate goals, policies, and also appoint the officers to carry on the daily routines and works of the office. Most of the owners act as the directors, but the directors do not have a share in the business. As per the state, there should be a minimum of two to three directors.
4. Name of the Owners or Share Holders
The owners of the corporation are also called as shareholders as they hold a share of the stock of the company. In the articles of incorporation, you should mention the number of shares that the corporation is authorized to issue, but not obligated to mention the names of the shareholders. But in the internal records, you need to specify the names of the shareholders and the number of shares issued to them.
5. Physical Address in State of Formation
The articles of incorporation must specify the physical address of the company and the person living in that place, who can receive all the legal documents, notices, and lawsuits on behalf of the company. The mentioned address is referred to as a registered office, and the person is referred to as the statutory or registered agent.
In most of the cases, the business location is also the registered office, and any person above age 18 can be appointed as the agent. For instance, if you do not have an office in the state, you can hire a registered professional agent for the corporation.
Conclusion
The above are the basic rules for forming your corporation. Once you have all the above details, then you are ready to get your company incorporated. Ready to get incorporated? Then our professionals at Bizlic will guide you through the process, create, and file your incorporation documents and ensure that they comply with the state laws. For more details, contact Bizlic to provide customized bylaws for your new corporation.
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