Incorporation Definition and Basic Steps

No matter what type of corporation you are planning to form, it will be guided by the rules set up by the incorporation definition. For example, if you form an LLC the rules will be slightly different than if you form a C corporation. Also whether you’re forming a for profit or a non profit will matter when it comes to incorporating.

Here are the basic steps you will go through when forming your corporation:

The first step is to decide what type of corporation you want to form. As I stated above there are a few different choices and each one has it’s own rules and regulations. Figure out which type will work best for you. For many small businesses an LLC works well because it doesn’t require the strict structure of other forms of corporations but it does offer tax advantages as well as certain advantages when it comes to the debt that is incurred by the corporation (you can be protected from creditors coming after your personal resources to pay of a corporate debt as long as you don’t sign a personal guarantee).

Once you know the type of corporation you want to form you have to decide what state you want to incorporate in. I know this sounds kind of weird, most people would just assume they would incorporate in their own state, and of course you can, but there can be significant advantages to incorporating in a business friendly state such as Delaware. Benefits like low taxes, low filing fees, the privacy of your shareholders, etc. all have to be taken into account. It’s also important to realize that in some states you don’t have to actually live in that state but you may need a registered agent that has a physical address in that state representing your corporation.

You have to pick out a corporate name that you like, reflects the type of business you have, and is available. You can easily contact your local secretary of state to find out if the corporate name you have chosen is still available.

You will also need to include the name of all the officers of the corporation, the physical addresses of each, the number of shares that are going to be issued, the amount the shares will be issued for, etc.

Make sure that when you are considering all these points that you turn to a lawyer in your state. Rules are different from one state to another so it’s important to find out the exact rules in the state you are planning on setting up your corporation in. Also note that I’m not giving you any legal advice, I can’t, I’m not a lawyer, this article is just intended to provide you with some basic information on how best to set up a corporation.

It’s an exciting time when you’re just starting a business and you are setting up your corporation. Use this information on incorporation definition to help jump start the process. Most of what you need can be found right online at the secretary of state website for your state, or whatever state you’re planning on incorporating in.

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