There are benefits of turning your business into a corporation. If you are interested in turning your business into a corporation, it is essential to understand the steps necessary to do so.
1. Check Your Name
First, you are going to need to check out your business name. Then, you will want to run a check on the name you want to use to ensure it is unique. You don't want to use a name that is already trademarked. Instead, you want to choose a name that is unique so any trademarks associated with it belong to you.
2. Consider Your Location
Second, when you become a corporation, you don't have to do so in your home state. You can incorporate a business in any state. You will want to study the corporate laws and tax rates in different states and the cost to incorporate. You are going to want to incorporate your business in the state that benefits your operations the most. Don't assume that your home state is the best state to incorporate in.
3. Choose Corporate Type
Third, there is more than one type of corporation that you can become. For example, you can become an S corporation, or you can become a C corporation, or you can become a limited liability company (LLC).
Each of these corporate types has different rules and regulations you have to follow. They can offer distinct advantages and drawbacks as well. You will want to consult with some professionals to determine what type of corporation you should become.
4. Choose Company Directors
Fourth, you are going to want to choose who your company directors are. With a corporation, you need to have a board of directors. You are going to have to include director positions inside of your official articles of incorporation.
You are going to need to have people who you can assign to be your company directors. These can be people who are actively involved in your business or just people you think would be good advisors for your business.
5. Deciding on Shares
Fifth, you are going to need to decide what type of shares you want to issue. As a corporation, you can, but don't have to, issue stocks. You can issue common stock for your business. Or you can issue the preferred stock for your company. This is something you are going to want to think carefully about these shares.
If you want to become a corporation, you need to take lots of steps before you apply for and obtain your certificate of incorporation. First, you will need to ensure your corporation's name is unique and choose a corporation type. Next, you will need to find company directors and decide on the kind of shares you want to issue for your company. Then, you can go forward with the legal side of incorporating your business.
If you are interested in forming a corporation for your business, contact a local business consultant.