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How to Incorporate your Home Business
There are several steps needed to incorporate your Home Business.
First of all, you need to secure the name of your corporation.
This simply means you need to make sure the corporate name is
available in the state that you wish to incorporate in. It cannot be too similiar to a corporate name that is already
registered in that particular state.
You also need to file the necessary documentation, known as the Articles of Incorporation - with the right state agency in the particular state
you are registering in.
You will need to decide which type of corporation you want to be. The most popular for
most Home Business operations is the C-corp and also ths S-Corp. You will want to talk to an accountant and/or lawyer before deciding on
which type of corporation you wish to set up. Each entity has it's own characteristics, benefits and limitations.
But the basic difference between the two is that a C-corp is an entity that is basically a clone of you, another you. So it perhaps offers you the most protection from potential lawsuits and other types of liability.
Your personal assets should be protected with this type of corporation.
An s-corp, however, possibly offers more tax protection because you can pay yourself in the form of dividends.
If your plan is for your Home Business to become a big business over time, you may want to consider a C-corp, as most big businesses are C-corps and this is a very flexible structure.
You also need to pay the necessary filing fees. You can either do this
yourself or have an attorney
complete the process for you. Obviously that is more expensive, but less of a hassle.
An attorney will probably charge you an hourly fee in addition to the applicable state filing fees.
It may take a month to a month in a half to complete the process and become incorporated.
You can generally pay an additional charge to expediate this process.
Your final step is a meeting of the directors and an adoption of your corporate by-laws. Stock should also be issued at this meeting.
A record of this meeting should be kept in a corporate record book. This is important for legal reasons, since if anyone ever tried to "lift the corporate veil"
for lawsuit purposes, these records could protect you.
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