A corporation is a legality in business that exists independent of the owners. With the influx of the Internet, businesses now have another option for incorporating online.
But how do you start a corporation?
Once you have decided what is the best move for your business is, articles are filed with the proper state agencies. Fees are paid at that time as well. Online incorporation services offer services to make the process easier for you. Many online incorporation services offer programs that will perform administrative duties, as well as help you fill out the paper work necessary to get your corporation off the ground. Once the articles are approved for incorporation by your state, online corporation services will include all the necessary record keeping materials, corporate seal and stock certificates. At this time, your corporation must hold a meeting to elect directors, and determine what rules your corporation will follow.
The structure of a corporation is not very complicated. A corporation is owned by the stockholders who do not directly manage the corporation. The stockholders influence corporate decisions by electing or removing directors, approving or disapproving amendments to the articles of corporation and vote on key decisions. Responsible for managing the affairs of the corporation, the Board of Directors supervise officers in day-to-day affairs. Their decision making is only concurrent to major business decisions.
The Officers carry out the everyday management tasks. They are appointed by the Board of Directors. Stockholders can be both on the Board of Directors and be Officers. In most states, it only takes one person to form a corporation, and that one person can be in charge of all corporate decisions alone.
Whether to incorporate or not to incorporate...that is the question. Advantages to incorporation are:
- Limited Liability to the stockholders- Since a corporation is separate from the ownership, stockholders are protected from debts and other legal liabilities of the business.
- A corporation can still exist even if the owner dies or sells his interest.
- Insurance and retirement plans are easier to establish ownership, and can be easily transferred through the sale or transfer of stock
Disadvantages are few, but you should be aware of the downfalls that could occur.
Double taxation is possible. First, the income to the corporation can be taxed (the profits) and then the shareholder may be taxed as well. Double taxation can be minimized by creating an S Corporation, which only pays taxes one time at the tax rate of the shareholders.
Online incorporation services can save you money. A corporation can be formed without the advice from an attorney, but as in all cases, if you need legal or financial advice, your best bet would be to speak with an attorney or financial advisor before signing anything.
Once the corporation has been approved, your corporation will need a federal employer identification number (EIN). The EIN is required of all US businesses, and is used for tax filing and for establishing corporate accounts. Online incorporation can get you on your way to success.
By R.S. Wagner