Are you an entrepreneur looking out to become a small business owner? If yes, then there are several things that you need to decide upon, and one of such things can be determining the ways of structuring your company.
There are several ways to structure your business: sole proprietorship, limited liability companies, general partnerships, and corporations. Know that there are pros and cons of each type of entity.
However, business tycoons consider corporations as one of the most complicated and regulated business entities. While their creation may be complex, they offer the best liability protection for shareholders and owners.
But, what exactly is a C-corp Structure?
Corporation- What does it mean?
A corporation is a structure that allows business owners to establish their company as a separate entity. The incorporated companies tend to enjoy the status of “corporate personhood.” And, this means that just like an individual, companies under this structure have the right to enter into contracts.
They can also borrow and lend money, sue, and be sued- all in the company’s name. Thereby, it is pretty convenient to say that shareholders and owners aren’t personally liable for the debts and obligations.
Business Corporation- How to Start One?
Now that you know what a corporation is, you’re curious about the process of setting up a C-corp with ease.
Know that starting a corporation can be tedious; however, diligence is the key, especially during the registration process. Some essential steps to get you started for creating a C corporation are:
- Select a Company Name:
While the detail may seem the most minor to you, it is vital to choose a corporate name. Know that it shouldn’t match or be similar to an existing corporation. Make sure to check the local secretary’s office to see the proposed name’s availability. Also, check the domain name of the chosen business name.
- Draft and File Articles of Incorporation:
Certificates and articles of incorporation are requisite documents for the company formation. While most states have strict regulations, know that articles of incorporation specify the company information. These may detail the business name, address, and the issued stocks.
Prepare your articles of incorporation and obtain signatures from the incorporator. You may have to pay a filing fee during registration and make sure to get a certified document copy.
- Create Corporate Bylaws:
Not all states need corporations to draft corporate bylaws. However, ascertain developing them in some way or the other.
It is always wise to consult a corporate lawyer for preparing bylaws as these are crucial for the business. It is because these determine the rights and duties of the shareholders, officers, and directors. These also specify how the corporation will operate.
After this, make sure to draft a shareholder’s agreement and maintain the corporate minutes. Also, make sure to prepare as well as execute the stock certificates. Update the corporation’s share ledger as it holds a record of who owns the shares and the number of shares they own.
- Get Employer Identification Number
The Employer Identification Number (EIN) is the company’s Social Security Number. Know that this number holds importance as it helps open a corporate bank account and file taxes.
Make sure to reach out to a legal professional as their assistance will help you get through the documentation process. Also, they will help you figure out the taxation policies and obtain permits and licenses a corporation may require.
The Bottom Line
The process of forming a corporation may appear complicated. Still, the benefits are sure to get you through the process with ease. Make sure to fulfill your corporate requirements for maintaining a separate identity and getting liability protection.
Seek legal assistance as a correct registration maybe your company’s first step towards long-term success!