Filing Services

The Startup Lawyer has a fantastic post detailing exactly how he would setup a company in Delaware (like he does for his clients). This includes:

• Incorporating in Delaware as a C-Corporation.
• Authorizing 10,000,000 shares of common stock at $0.0001 par value.

He details other issues like the appropriate amount of stock he would issue to the founders, vesting schedules and even how he would raise capital. Highly recommended.

The only thing I would add is that a startup doesn’t have to start by issuing that many shares, you can save money by starting with a smaller amount, for example, one thousand shares and then if you get to the point where you need to raise money or venture capital, you can amend your “Articles of Incorporation” for higher share amounts later.

It is a fairly simple procedure to incorporate a business and as a professional you will benefit from the advantages of incorporation such as personal liability protection, taxation benefits and business credibility. When you incorporate a business you are required to complete a few necessary steps including filing your Articles of Incorporation with the state, drafting your Corporate Bylaws, obtaining a Federal Tax I.D. Number (also known as an FEIN or EIN) and choosing a registered agent. An online incorporation service can help you with each step or you can work with your state’s filing office, usually the Secretary of State, to incorporate a business.

You will need to select a state in which to incorporate a business whether it be for profit or nonprofit. Most often, small business owners will incorporate a business in their home state or the state where the business will be operate and be physically located. It might be of some benefit to your particular business to incorporate out-of-state, but virtually every state requires that an out-of-state company also incorporate in its home state, so make sure you have done your research prior to choosing your state to avoid paying  more money than necessary.

In addition to choosing your state, you will need to choose a unique name for your business. The name will need to be available in your state and you should also know that some states have their own guidelines for business naming, so it is a good idea to have a few names picked out in case your first choice is not available for whatever reason.

You will need to wait until you have received the filing paperwork back from your state before your company is officially incorporated, but there are things you can do while you wait such as prepare a business plan for operating your business. Your business plan can be simple or comprehensive depending on the complexity of what your company will do and the requirements of your bank, if you are applying for a business loan. Other things to do while you incorporate a business include opening your company bank account, leasing office space, obtaining any permits or special licenses you will need and hiring employees.

Your corporation will be structured with Shareholders owning the company stock. Often, a small business owner operates a company on his or her own so exists as the company’s only Shareholder. It is also common for a small business owner to be the corporation’s one Director and hold all Officer positions (President, Secretary, Treasurer, etc.). A corporation is operated by rules set forth in the Corporate Bylaws, which are completed after you incorporate a business and can be modified in time as the business changes or grows. Operating a corporation requires, at the minimum, holding an annual Shareholders and Directors meeting, keeping written minutes of any decisions affecting the company and following general corporate rules as dictated in your Corporate Bylaws.

By completing the steps outlined to incorporate a business, your business idea will become a reality. An good online incorporation service will charge reasonable fees and assist you through the process of starting your own company.

As you’re starting your own company you may be wondering how to incorporate and in fact, what a corporation itself is. A corporation exists as its own legal entity and provides personal liability protection, builds business credibility, works as a shield from company debt and offers certain tax advantages for the small business owner. Incorporation is a fairly simple process, but it might be beneficial for you to work with an online filing service that will guide you through the incorporation process including Bylaws, Organizational Minutes and the like.

You will want to start by choosing the state in which to incorporate. You will most likely want to incorporate in your home state or the state where your business will be physically located. While there may be advantages for you to incorporate in a business-friendly state such as Delaware, Nevada or Wyoming, virtually every state requires that an out-of-state corporation “re-register” in the state where they are actually doing business; so you will more than likely still have to pay the necessary taxes and fees in your state if you choose to incorporate elsewhere.

To legally become an existing corporation in your state, you will need to file Articles of Incorporation and complete Corporate Bylaws, which will be the rules for operating your corporation on a day-to-day basis. How to incorporate also requires that you choose a name for your business. You will need to make sure the name is available by checking with your state’s corporate filing office, usually the Secretary of State. An online filing service can check for name availability on your behalf.

Because a corporation exists as its own entity, it requires its own identification number just as an individual has a Social Security Number. A company’s identification number is known as a Federal Tax I.D. Number or FEIN or EIN. An online incorporation service can obtain your corporation’s FEIN during the incorporation process or you can obtain one yourself from the IRS.

Incorporating as a corporation also requires a certain management structure of your company. Corporations are structured with Shareholders owning the company stock. Shareholders elect the Directors, also known as the “Board of Directors,” and the Directors appoint the corporation’s Officers (President, Secretary, Treasurer, etc.) to operate the company on a daily basis. A corporation’s Shareholders can also serve as its Directors and Officers, so if you intend to operate your company on your own or will hire only a small number of employees, you will most likely be the only Shareholder, Director and also hold all the Officer positions.

Once you’ve completed the legal steps of how to incorporate, you will need to follow other steps to successfully operate your business. Some of these steps might be to open your company bank account, lease office space and ultimately, figure out how you will finance your business until you start earning income. The important thing is that you can become incorporated fairly quickly, depending on the filing processing time in your state, freeing yourself up to see your business idea become a legitimate business.

If you’ve thought of a business idea and want to start a company, but aren’t sure how to begin, the good news is you’re already on your way. The first step to starting a company is having an idea. Your idea might come from a personal interest or an activity you’re particularly good at, such as opening your own bakery if your cupcakes are the best in town. Your idea might be the solution to a common problem that a lot of people need help with. Maybe you’re thinking about buying a business that’s for sale to put your own effort into improving an existing product or service. The most important thing is that you feel passionate about your idea and have the determination to see it grow from a start-up to a working business.

Once you’re certain that your idea is one you will want to follow through with, and is realistic for you as an individual—someone who doesn’t like children would not want to open a daycare, for instance—you will need to prepare a business plan. A business plan will help you figure out a step-by-step process for growing your business from a simple idea to a successful enterprise. A business plan might sound complicated but doesn’t have to be. You can start a company with a simple business plan that you’ve outlined yourself on a piece of paper. However, if you plan to apply for a business loan to start a company, you will need a more comprehensive business plan to satisfy the requirements of your lender. There are many books and online services available to help you create a comprehensive business plan.

In addition to outlining the structure of your business and your business goals, your business plan should determine the costs involved in starting a company. Many small business owners start a company with very little capital and rely on credit cards or the help of friends and family. Some small business owners will also seek investors to help them finance the company during the start-up phase. If your business will require a large amount of money to lease office space or buy special equipment, you will probably need to apply for a small business loan or a bank loan. You can learn more about your loan options by visiting the website of the Small Business Administration or visiting your bank.

In addition to writing your business plan and working out how to finance your business, you will need to follow the required legal process to start a company. Choose a name for your company and select the legal structure that will work best for your business, such as a incorporating as corporation or an LLC. You will need to obtain a Federal Tax I.D. Number, also known as a FEIN or EIN, which is a company’s identification number much like an individual’s Social Security Number. A FEIN can be obtained through the Internal Revenue Service or through an online incorporation service when you start a company. An online incorporation service will also help you start a company by guiding you through the official formation process and assisting with the necessary paperwork.

If you’re thinking about starting a company, there are many benefits to incorporation. Incorporation (also known as “incorporating” or “forming a corporation”) provides small business owners with personal liability protection, builds business credibility, offers tax advantages and makes it easier to raise money through the sale of company stock. For these reasons and others, the corporation is one of the oldest and most prestigious entities of choice for anyone who wants to start a company.

Incorporation makes it possible to purchase real estate, enter into contracts and shield individual assets and equity from business-related debt collection and any potential legal disputes, because a corporation is its own entity separate from its owner(s). Essentially, incorporation creates a legitimate legal entity separate from its owner(s); similar to a new “person” with its own name and identification number. A company’s identification number is known as a Federal Tax I.D. Number or FEIN or EIN. An online incorporation service can assist you in obtaining your company’s FEIN at the time of your company formation or you can obtain one yourself from the IRS.

A corporation is structured with Shareholders who own the stock of the corporation. A corporation’s Shareholders then elect Directors, known as a corporation’s “Board of Directors,” who make many of the major decisions affecting the corporation and usually with the Shareholders’ best interests in mind. The Directors then appoint the corporation’s Officers (President, Secretary, Treasurer, etc.) and the Officers operate the company on a day-to-day basis. In many cases, a corporation’s Shareholders will also serve as its Directors and Officers and it is common for the owner of a small business to be its only Shareholder, its sole Director and hold all Officer positions.

The rules for operating your corporation are set forth in the Corporate Bylaws. The Corporate Bylaws are established during the incorporation process and can be modified as the business evolves from the start-up phase. Operating your corporation requires, at the minimum, holding an annual Shareholders and Directors meeting, keeping written minutes of major company decisions and following general corporate rules as dictated in your Corporate Bylaws.

Incorporation provides additional benefits in that a corporation’s Shareholder(s) can deduct business expenses such as employee healthcare programs and annual meeting costs, and income is reported on the corporation’s own tax return. However, new small corporations will often choose to elect “S-Corporation Status” after formation to avoid “double taxation.” An s-corporation is taxed with the corporation’s profits and losses added to the personal tax returns of its Shareholders to avoid having to pay taxes on profits once, then again when the profits are given back to the Shareholders as dividends. Electing “S-Corporation Status” requires only (besides US Citizenship and fewer than 100 shareholders) that the appropriate resolution be adopted and Form 2553 be submitted to the Internal Revenue Service with some states requiring their own version. New business owners should know that while there are benefits to electing “S-Corporation Status,” the s-corporation has more restrictions than a regular corporation and does not allow for the deduction of certain business expenses such as healthcare.

Incorporation requires that you choose a state in which to form your corporation, which will usually be your home state to avoid paying additional fees. Your corporation might benefit from the friendly business laws of Delaware, Nevada or Wyoming, but virtually every state requires a corporation to “re-register” as a “foreign corporation” if formed in a state other than its physical location. For instance, a corporation that is formed in Nevada, but is physically located and operated in the state of Texas, will have to register in Texas as a foreign corporation in addition to original formation in the state of Nevada.

If you would like to start a business but aren’t sure how to incorporate, an online incorporation service can assist you with all the necessary paperwork you will need to file with your company’s state to become incorporated. Additionally, an online incorporation service should be able to guide you through the process and provide other services that may be of help to you such as obtaining your FEIN and obtaining your Corporate Bylaws.