The decision to form a corporation is one that should not be taken lightly. Corporations are legal entities separate from their owners and provide the business owners with certain protections. In addition, corporations are subject to different tax laws than other business structures, such as LLCs or partnerships. Before you consider forming a corporation, it’s important to understand the process involved in setting up and maintaining a successful corporate structure.
Choosing the Right Corporate Form
The first step in setting up a corporation is deciding which type of corporate entity is best for your business. There are several types of corporations, including C-Corps, S-Corps, and Limited Liability Companies (LLCs). Each type of corporation has its own advantages and disadvantages; for example, C-Corps offer more protection from liability than LLCs but they also require more paperwork. It’s important to research each type of entity before making your decision so that you can choose the one that best suits your needs.
Create a Corporate Name
Once you have chosen your business structure, it is time to create a corporate name. Be sure that the name you choose is unique and not already taken by another business in your area or state. Additionally, be aware that some states require that the name include words such as “Incorporated” or “Corp” at the end of it. Check with your local government office for specifics on naming requirements for corporations in your area.
Filing Your Articles of Incorporation
Once you have decided on which type of corporation is right for you, the next step is filing articles of incorporation with your state government. This document officially creates your corporation and outlines the basic information about it such as its name, purpose, address, number of authorized shares and directors’ names. It’s important to make sure all information included in this document is accurate; if not, it could lead to problems down the line when filing taxes or obtaining financing.
Setting Up Shareholders & Directors
After your articles of incorporation have been filed with the state government, you will need to set up shareholders and directors for your corporation. Shareholders are individuals who own shares in the company while directors manage day-to-day operations. These individuals must be legally appointed according to state law; failure to do so can lead to serious legal issues for both shareholders and directors alike. It’s important to consult an attorney when setting up these roles as there may be additional requirements depending on where you live or what type of industry you’re operating in.
It's clear that creating a corporation requires careful planning and preparation - but once done correctly it can provide numerous benefits including limited liability protection and potential tax savings over other business structures like LLCs or partnerships. Whether you're just starting out or already established in business it's worth considering incorporating if it makes sense for your particular situation.
For more information about corporations, or would like to set up your corporation, contact Curington Law, LLC at 312 803-1755 or online.
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