Business Startup in USA – The Easiest Way to Incorporate Your Business
Business Startup in USA –
The Easiest Way to Incorporate Your Business
Founders of startups are usually so engrossed with their products that they at times forget more important things with hindsight. One such very important aspect of the business is to incorporate your start up. Imagine the horror when you wake up one morning to find someone claiming 35% of your company. A company that you put your heart and soul in building it up and they, well let’s say they did almost nothing.
To overcome such situations, or to give yourself immunity, it is advisable to incorporate your business as soon as possible. For founders of startups, who already have a lot on the plate, incorporation can come across as pretty overwhelming. But there are simple ways of getting your business incorporated.
Will you benefit
Take a moment to assess the situation and decide if it adds up for you to incorporate your business. It largely depends on your long term goals and also the type of company you want to start. There are lots of benefits, the most common ones being, it allows you to limit liability on you personally and also easier transfer should there be a need for it.
Board of Directors
In case of startups, the fonder or the CEO usually starts off the board and adds personnel on to it as time progresses. It is important to present the details of the board of directors in your paperwork. Thus, it makes sense to entrust them with proper roles before any sort of filing. There might be cases where you would want to change the board of directors, which is possible by providing the state with valid information.
Nod of the Shareholders
Shareholders of your company also have a say in whom to elect for the board. They financially back your business and thus expect some claims. When you are ready with your filing for incorporation, it is advisable to consult with your shareholders and get their consent as well.
S or C?
Depending on the size and operation of your business, you can choose between S corporation or C corporation. Larger entities usually go ahead and file for C corporation type. It allows them to pay corporate taxes and benefit from the same. For business with distributed income, there are chances of double taxation over here. You should go ahead with S corporation if the number of shareholders is less than 100. There is no need to pay taxes at the corporate level. The taxation of S corporation allows you to pass on your business losses into your personal filings.
A corporate lawyer who deals with incorporations can be of great help in such times. The process can get complicated at times and any mistakes done initially will come back to haunt you at a later stage. Take help of someone who does not have interest financially or likewise in your startup, for an unbiased view.
Filling up of Forms
The office of the Secretary of State handles all matters related to the incorporation of a business. Some cases might need the intervention of some other departments as well. Once the office of Secretary of State directs you with the forms required, you would need to acquire articles for incorporation. Articles usually comprise of about 10 to 15 different set of documents and they do differ from state to state. You would then need to pay the incorporation fees, which usually range from $80 to $100 for some forms. If you are in a hurry, you can expedite the process with higher fees.
You need to file the statement of information forms as well. The duration and frequency of when to do so vary from state to state. The statement consists of basic information such as the address of the corporation, name and address of corporate directors, along with board member names. The last step would be to register your company with IRS or the Internal Revenue Service as per the tax category your corporation falls into. C corporations usually file the IRS Form 1120 and S corporations IRS Form 1120S. S corporations might also need to file IRS Form 2553.
Incorporating your start up might sound like a herculean task, but in reality, it is not. Take the help of an attorney to smoothen and fasten up the process.