Business Incorporation
Business incorporation involves a lot, but to better understand it, it is best to break it down into the many details that it involves.
Some Important Information
Your first question might be, “What the heck is a corporation anyway?” A corporation is a legal entity that can exist separately from its owners. A corporation can only be created properly when all articles of incorporation (sometimes known as a charter or a certificate of incorporation in some states) are filed with the proper state authority and all fees are paid.
So of course there is paperwork. There is always paperwork involved when trying to do anything in the business world. It may seem somewhat of a hassle, but it’s always best to do it now so you won’t get in trouble later. Trust me; it’ll pay off in the end. You must have prepared articles of incorporation that conform to your state laws and file them appropriately. There are also fees, franchise taxes and other initial fees involved. A franchise tax is a tax on the privilege of carrying on a business as a corporation in a state. The value of a franchise tax can vary. It is measured by the amount of earnings, total value capital or stock you may have, or by the amount of business done. Some states, like California for example, the franchise tax is simply the income tax. A tip of advice for those who are looking to incorporate soon; If you incorporate through BizFilings (www.bizfilings.com) all you are required to do is fill out and complete the online order form. BizFilings will then prepare and file all your articles of incorporation. How great is that? Additionally, the price you pay includes all the fees for incorporating as well as preparing fees that BizFilings does for you. It is very simple. Just fill out the form online to get started.
There is a common misconception that incorporating requires hiring and paying for an attorney. This, however, is untrue. An attorney is not a legal requirement to prepare and file incorporating documents. You can prepare them all yourself and do all the work, but you should be very aware of and understand the requirements of the state you intend to incorporate in. If you are unsure, nevertheless, it is better to be safe than sorry. If you are feeling uneasy about preparing them yourself or if you are unsure that incorporating your business will be beneficial to you, it is best to consult an attorney or an accountant even.
The name of your corporation is crucially important. It is vital to choose a good name for your corporation because you want to present a good image for your new business. There are legalities that go along with this as well. Legally, the name you choose cannot be “deceptively similar” to any other corporation. As well, it must be “distinguishable on the record” of your residing state. Here’s an example for you; say for instance that there is a corporation in your state of Michigan named Flower Corp. You would not legally be allowed to name yours Flour, Inc. It too closely resembles another corporation’s name, therefore, it wouldn’t be allowed. It is highly possible that the first name you choose is already taken, so as a suggestion, choose a second name and put it on your order form as well. The name you choose must also show that your business is incorporated (this goes for most states). As a result you must include Corporation, Incorporated or an abbreviation of either in the name you select.
