Incorporating yourself brings many advantages, the most important of which is protecting your personal assets from liability in case your corporation is sued. Your personal assets are protected because the law considers a corporation a separate person. But in order to incorporate, you must follow several steps.

Pick a State

Select the state where you wish to be incorporated. Many companies (including most of the Fortune 500 ones) have incorporated their businesses in Delaware for a variety of reasons. For one thing, the state has a generally pro-business culture and supports laws that favor businesses. Also, corporate lawyers feel comfortable with Delaware's corporate law, because they all learned it in their corporate courses in law school. The law permits you to incorporate in any state (or the District of Columbia), and you do not need to incorporate in your home state.

Corporate Name

When you start the incorporation process, you must come up with a name for your corporation. Your choice for the name must be filed with the Secretary of State's Office in the state where you wish to be incorporated. Some states permit you to reserve a corporate name before sending in all of the required documentation. However, such reservations require that you pay the state a specified fee.

File Paperwork

File your incorporation paperwork with the Secretary of State's Office in the state where you wish to incorporate. Each state has their own particular set of documents you must complete and submit in order to incorporate. Be sure to obtain all the required documents.

Obtain Tax ID

Obtain a federal and state tax identification (ID) number. You obtain a federal ID number from the Internal Revenue Service and a state number from the agency in charge of raising and collecting taxes in the state where you are incorporating.

Choose Board

Choose a board of directors for your company. Corporate law makes the directors responsible for running the corporation and choosing corporate officers. As the sole initial shareholder, you can choose the initial board, and you may even name yourself as a member. Once you have chosen your directors, they can assist you in drafting the corporation's bylaws, which are the rules that determine how your corporation is run.

Source:

Incorporation Services: Incorporating a Business

Delaware.gov: Why Corporations Choose Delaware

More Information:

Findlaw: Incorporation and Legal Structures