Incorporating your business turns it into a separate legal entity. You'll gain personal asset protection against business losses and debts when you incorporate your business. Forming a corporation requires more paperwork and administrative considerations when compared with other business entities.

Naming your Corporation

The name you create for your corporation should be original. In fact, you'll need to conduct a search to ensure that your business name isn't taken by another entity. Your business name will be required to end in either Incorporated or Corporation. The name of your corporation can't infringe on the trademark of an existing business in any way. Some states may allow you to reserve your business name for a short time, until your articles of incorporation are filed. To bypass additional costs associated with this service, be prepared to file your articles of incorporation as soon as your name search is complete.

Directors

Name the directors of the corporation. These individuals are responsible for handling the corporation's finances, issuing stock and making major company decisions. The Board of Directors also selects corporate officers and sets the salaries of the employees. The director of a corporation may consist of one individual or more. Designate a person to act as the incorporator of your business. This individual may be an attorney, accountant, filing agency or owner. An incorporator makes all decisions during the forming of the corporation. These powers are dissolved once the corporation is formally established.

Paperwork

File your articles of incorporation. Your secretary of state's office may have pre-printed articles of incorporation. Simply fill in the blanks and pay the appropriate state filing fee. Articles of incorporation can be very basic but should include the name of the business, name of the directors and the address of the business. A corporation is required to have a registered agent. A registered agent may be an individual or business that receives mail on behalf of the corporation. A corporation may be its own registered agent. In addition to filing articles of incorporation, some states require a newly formed corporation to publish a notice of incorporation in a local publication. This is a good time to obtain any permits or licenses necessary to operate your business. Apply for a tax ID number for your corporation. This can be done online at irs.gov.

C corp vs. S corp

You may choose to be a C corporation or an S corporation. C corporations are usually large corporations with more than 75 stockholders. S corporations are required to have fewer than 75 shareholders. Furthermore, C corporations are subject to double taxation, while S corporations avoid double taxation by passing business gains and losses to the stockholder's individual tax return.

Bylaws

Create the rules that will govern the operation of your corporation. Your corporate bylaws may contain information such as time and date of corporate meetings and voting procedures. Corporate bylaws should be created at the first shareholders meeting.

Source:

Allbusiness.com: The 5 Most Important Steps To Take in Forming a Corporation

Entrepreneur.com: Top 5 Mistakes in Forming Your Corporation

Nolo.com: How to Form a Corporation

More Information:

Incorporationsinc.com: Steps to Form a Corporation

Mytowntalks.com: Follow These Steps to Form a Corporation