Simple Steps for Forming a Legal Entity
After you speak with your attorney or CPA, many online sources can walk you through the process of business incorporation to ensure you dot all your Is and cross all your Ts. Weve listed the main steps to forming a legal entity below to help get you started.
The first step is to decide on a company name. Depending on what legal entity you form under, you will have to incorporate the legal ending to your business name. For example, if you choose Finders Keepers for your business name and form a corporation, your corporate name is now Finders Keepers, Inc. The legal ending indicates that the business is a legal corporation and not just a business registration or partnership.
Decide which state you should form your legal entity in and factor in tax and non-tax issues. On the next page, well discuss the most popular states business incorporate in and the reasons and benefits to form a corporation in those states.
Check with the secretary of state for name availability and conduct a trademark check so you have a distinctive sign to uniquely identify and distinguish your products and/or services. Determine the current size of your company and forecast its potential growth to determine what legal entity your business should form under.
Discuss the regulatory requirements and what forms youll need to fill out with your attorney or online service provider. If you form a corporation, youll have to file an Articles of Incorporation document with the secretary of the state in order for it to be official. This document provides the corporations name, name of person(s) organizing the corporation, names of corporations initial Board of Directors, location of the corporation, profit or non-profit, and other information.
Last, file corporate bylaws with the state. These will outline important corporate details and other types of valuable information. Issue stock certificates to the shareholders in compliance with security laws and make note of corporate actions and meeting minutes in the official corporate minute book. Elect record officers and directors of the corporation. Contact the IRS to obtain your state and federal tax ID numbers, or get the necessary information off of the IRS website.
Many of the online incorporation services can walk you through the process and fill out the necessary forms needed to form a legal entity.