Do you want to start your own corporation in 2020? Here’s our guide on how to start a corporation in just a few simple steps.
Starting a business can be risky.
More often than not, you must put money and assets on the line before knowing if the business will work. And with 20% of businesses failing within the first year of operation taking the initial risk isn’t easy.
One of the safest ways to start a business is to set up a corporation. If you’re thinking about setting up a corporation, read on for a closer look at how to start a corporation and the steps you’ll need to take to get this type of business off the ground.
1. Pick a Name
The first, and possibly most important, step is to select a name for your corporation.
While you might already have a few names in mind, it’s important to pick a name that isn’t already in use or has been reserved by someone else.
Search both state and national records for any potential business names you’re considering. Pick something that’s available and fits your business.
2. Choose a Corporation Type
There are a few different types of corporations to choose from.
From setting up an s corp to forming an LLC, selecting the right type of corporation comes down to the type of business you’re running and the sort of structure you’d like to have.
3. Select the Right Directors
With your name picked out and a clear structure selected, it’s time to elect a board of directors for your corporation. Directors make the major decisions in corporations, so it’s important to pick the right people.
While you may be able to appoint yourself as the director, some states require more than one person to sit on the board of directors.
4. File Your Articles of Incorporation
Once you’ve defined the structure of your organization, it’s time to make it official.
Every state has forms that will need to be filled out in order to officially create a corporation. Be sure you find the right forms and fill them out properly and completely before returning them to the state.
Many states require important details, like listing the board of directors, so make sure you’ve nailed down these details before filing your articles of incorporation.
5. Write Corporate Bylaws and Complete Business Setup
It’s also important to have a set of corporate bylaws in place. These will define how your business operates and handles various situations.
Before you actually open for business, you’ll also want to take care of some important details like obtaining the right business licenses and permits for your state and local area. Be sure to get a state sales tax ID and register with the IRS as well.
How to Start a Corporation the Right Way
Figuring out how to start a corporation doesn’t have to be difficult.
Start by picking the right name and clearly defining the structure of your business. Then, you’ll need to take the right legal steps to start a business in your state.
Check out the rest of our articles for more useful business advice.