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Setting Up Your Own Corporation

set up your own corporationThis article is intended for those business persons that wish to incorporate online. In this article you will find information that the author feels is most important to keep in mind while incorporating your new business, including a short glossary of corporate terms, an overview of the incorporation process, and a couple warnings that one should be aware of.



Summarized glossary of terms:



Annual Report:
This is a report that lists the directors and officers of a corporation. It is required to be filed with the division of corporations every year so as to maintain the corporation's "good standing" status. This Report may either be mailed or completed online.



Corporation:
A corporation is a legal business entity that is established for a company with perpetual duration. The corporation is allowed to borrow money and to enter into contracts that are separate and independent of its owners (stockholders). Owners receive profits and elect the directors who run the company through officers that conduct the day-to-day activities. Owners are protected by a "corporate veil" which prevents debts against the company from being held against the owners.



Good Standing:
This term describes a company that has performed certain required tasks, including: filing all necessary reports and documents, having a registered agent (a.k.a. resident agent) and being current in terms of all penalties and fees owed to the state.



Limited Liability Company (LLC):
An L.L.C. is a type of entity that is owned by members, operated by managers and run by an L.L.C. operating agreement. The LLC has the status of a Pass-Through Tax Entity and defaults to a partnership. It is especially suitable for holding investment assets like real estate.


Operating Agreement:
This is a partnership agreement that establishes the rules and regulations of an LLC (Limited Liability Company). The operating agreement is similar to the bylaws of a corporation, but also includes some provisions that are found in Shareholder Agreements.



Registered Agent:
This is the person designated to receive a company's Series of Process on behalf of a company. The registered agent must be located and available at their provided address (in that state of business). A registered agent is required if a company is to remain in existence.



Overview of the incorporation process:



There are three basic steps to incorporating online:



1. Get the info. This is possible the greatest skill a business person can acquire - getting the information he or she needs. Using search engines such as Google or Yahoo is a great first step in this process, and can be further helped by combining that information with information obtained from reliable sources - government officials, registered agents (un-biased ones), and from others. Only after all of the information is obtained, is the next step possible.



2. Make the corporate decisions for the future - Once you have the information, you can decide what type of formation is best - an L.L.C., a corporation, a partnership, etc. You can also then pick the state that best suits your tax and other needs. If you don't feel you can make all of these decisions yet, perhaps you should think about going back to step 1.



3. Make the corporate decisions for the present - Much like step 2, in step 3 you must make some decisions based on the information you gathered. Unlike the all-important step 2, however, step 3 involves picking the agent and package that are the best for your budget. Now here's the key - the one that is best for your budget is not necessarily the cheapest package. In fact, it is usually one of the expensive packages. The reason for this is that many packages leave out some essential, and often required, pieces of the corporate puzzle which you will have to make up for later on. Instead of going through this hassle, pick the most complete package, which will undoubtedly turn out to be the cheapest for you overall.


Warnings:



There are two warnings (or you could say two pieces of advice) that you should be aware of before you venture out into the world of incorporation.



1. Never underestimate the power of Step 1 (above). Now matter how much it is stressed, the importance of step 1 (getting the info) will always be understated. You will never be taken advantage of or make the wrong decision if you are able to get all the information you need.



2. You are the best thing for your business. Only trust yourself - everyone else will be biased in one way or another. Only you truly know what you want in a package, in an agent, in the future, etc.



With all this information now stuffed into your cranium, I will close this article and bid you farewell. Good luck on your corporate journey.