Your articles of incorporation must list the names of some of your decision-makers. There are two types of decision-makers you might have to identify: incorporators and directors. In all states, the articles of incorporation must list the names of one or more incorporators. An incorporator is a person responsible for preparing, signing, and filing the articles of incorporation. Incorporators' duties typically end once the articles are filed, and a board of directors is chosen.
Some states also require you to list the corporation's initial board of directors. The board of directors is responsible for setting corporate goals and policies and naming officers to conduct the corporation's day-to-day business. In a small business, the board of directors is usually made of up the business's owners, but directors do not have to own shares in the business.
Each state's laws set a minimum number of directors—usually one to three. The owners of a corporation are known as shareholders, and they own shares of stock in the business.
In your articles of incorporation, you'll typically need to specify the number of shares of stock your corporation is authorized to issue. Still, you won't have to list the names of the shareholders. Your internal corporate records should include your shareholders' names and the number of shares of stock issued to each of them.
The articles of incorporation must specify a street address within the state, and a person located at that address that can receive legal documents, notices, and lawsuits on behalf of the corporation. The address is sometimes referred to as a registered office, and the person at the address is referred to as a registered agent or statutory agent.
In most states, your business location can serve as the registered office, and a corporation or anyone aged 18 or over can be the registered agent. However, if you don't have an office in the state where you incorporate or prefer to have someone else act as an agent for you, you can hire a professional registered agent.
Once you've collected this basic information, you're ready to get started on forming your corporation. In addition to the articles of incorporation, you'll need bylaws that will guide the way your corporation operates. Contents 3 min read. Jane Haskins is a freelance writer who practiced law for 20 years. Jane has litigated a wide variety of business dispute… Read more.
Starting a Business. LLCs and S corporations are different aspects of business operations, but are not mutually exclusive. Use this guide to learn more about the difference between an LLC vs. As a business owner, you have many options for paying yourself, but each comes with tax implications. Each business structure has its advantages and disadvantages.
Are you a small business owner wondering if you should incorporate? Are you worried about costs and what will change about your business?
Incorporating a small business offers many potential advantages, as well as a few disadvantages. Most people decide to incorporate their small business because it offers the advantage of limited liability. If you run a sole proprietorship, then you as the business owner must assume all the liability of the company. This means that as a sole proprietor, your personal assets, like your house and your car, can be seized to pay off any business debts.
However, if you incorporate your business, then you become a shareholder in the corporation. As an individual shareholder, your liability is limited to the amount you have invested in the company. Did you know that even if the shareholders die or quit the business, or if the ownership of the business changes, the corporation will continue to exist?
This is not the case when it comes to running a sole proprietorship. Once your small business becomes a corporation, you can figure out when and how you receive income from the company, which is a real perk come tax time. Incorporating offers several benefits to businesses, including some smaller companies. Incorporation represents a major shift in the development of a company that has operated without being incorporated because business becomes its own legal entity.
There's no single "right" entity form for your company, so weigh the options to see if incorporating is the best fit for you; once you incorporate, it can be very costly to undo. One of the most significant advantages of incorporating your business is limited liability. When you're operating as a sole proprietor or general partner, you're liable for all of the entity's debts.
If the company doesn't have sufficient assets, you could see your own bank account seized or your home foreclosed on.
When you incorporate, you're not liable for the general debts of the corporation. If the corporation gets sued, you and your personal assets are protected. All you have at risk is what you have invested in the company. Incorporating your business creates a separate legal entity rather than having a sole proprietorship or general partnership, which are intertwined with their owners.
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