Of course, like any form of business, there are advantages and disadvantages to becoming a corporation. The differences lie in the state where you incorporate and the countries where you operate as a foreign corporation.
- Here are a few similar (across state) advantages of forming a corporation:
- Some states do not tax corporate income and corporate shares.
- Some states do not impose a franchise tax on corporate income.
- Corporations may be allowed to purchase, hold, sell, and transfer their stocks.
- Should your corporation own property, some states in the US do not impose an Estate Tax? These may also have low sales and property tax rates.
- Some states do not charge a Unitary Tax.
How to Form a Corporation in Your State
Ready to form a corporation, here are simple steps to take. Please make sure to follow this diligently. The care you receive at this stage of your incorporation will save you from headaches in the future.
Form A Corporation Step 1: Choose a Name
As important as your line of business is your business name. Just imagine Amazon.com being called GreatBarrierReef.com instead. You won’t think of a jungle of choices – instead, you might think of an unfathomable sea of stuff. Choosing a name is a way for you to make an impact and get the attention of your target audience. It is a way for you to remember – so, it is essential to choose right.
Plus, it has to be unique. It is not just for brand recall purposes. It is also a requirement of every state. Your corporate name needs to be unique to your business, and it must not have any similarities with existing corporate names. Amazon is already Amazon, and you can’t call your shopping site Amazona.
Form A Corporation Step 2: File Your Articles of Incorporation.
Your Articles of Incorporation is a crucial document that you need to file with your Secretary of State. Here, you need to include:
- Your chosen corporate name and address of the corporation
- Your assigned Registered Agent for service of process, their address and name, address and signature
- Your Board of Directors and their addresses
- The number of shares issues.
- Your incorporator and their address.
Filing this form comes with a fee, ranging from $75 to around 1,000x this amount. It depends on how big your corporation is.
Step 3: Elect a Director, File A List of Officers, and Meet for Your Corporate Bylaws
Many states give you a month’s notice to provide them with an initial list of your board officers, your directors, and your assigned Registered Agent of the service process. You must also apply for a State Business License within this time, once you’ve completed your officer list. There is a fee when you file this.
Step 4: Set up a Corporate Records Book and a Bank Account within the State
Your Corporate Records Book is a copy of all your corporation’s critical documents, including your Articles of Incorporation, Stock Certificates, and your Bylaws. This is maintaining within your place of operations.
A bank account within the state is also essential as it is a way to establish your business’ legitimacy.
Step 5: Accomplish Your Taxation and Licensing/Permits Duties
Lastly, you need to make sure you take care of all your tax, licensing, and permit responsibilities. Compliance keep your business up-to-date and out of trouble!