ContractsCounsel Logo

Incorporate a Business

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 7,612 reviews
Home Blog Incorporate a Business

Jump to Section

To incorporate a business means to legally create a separate entity for asset and credibility protection and access to growth-oriented financial opportunities. There are numerous advantages to incorporating your business, including limited liability protection, tax advantages, and enhanced credibility. Upon incorporation, a company attains the power to acquire property, enter contractual agreements, and engage in other lawful business activities. Let us read this blog and learn more about incorporating a business.

Types of Business Entities

Choosing the right business entity structure is helpful for entrepreneurs and business owners, as it determines their operations' legal and financial implications. Understanding the various types of business entities is essential when making this important decision.

  • Sole Proprietorship: A sole proprietorship is the most fundamental corporate entity structure. There is no legal distinction between the business and the business owner itself. The owner assumes complete responsibility for the debts and obligations of the business. While minimal documentation is required, limited liability protection is not provided.
  • Partnership: Two or more people or entities establish a commercial partnership. General partnerships have shared management and public liability. Limited partnerships have general and limited partners. Partnership agreements specify rights, duties, and profit-sharing.
  • Limited Liability Company (LLC): A limited liability company combines a corporation's liability protection with a partnership's flexibility. It protects the personal assets of the proprietors from business liabilities. A limited liability company may be administered by its members or managers. Profits and losses are reported on the individual tax returns of the proprietors.
  • Corporation: A corporation exists as a discrete legal entity from its shareholders or owners. It offers the highest level of liability protection. A corporation has perpetual existence and can continue operations regardless of a change in ownership. It necessitates formalities such as conducting regular meetings and keeping accurate records.

Steps to Incorporate a Business

Incorporating a business represents a pivotal stage in establishing a legally autonomous entity endowed with distinct legal personality, rights, and obligations. This method offers numerous advantages, including liability protection and the ability to raise capital. The essential stages involved in incorporating a business are as follows.

  1. Search for Name Availability. Perform a comprehensive search to ensure the desired business name is available and not already used. Verify name availability with the Secretary of State's office or online resources. Consider the availability of trademarks and domain names as well.
  2. Draft and File Articles of Incorporation. Write the Articles of Incorporation for your business. It includes the company's name, listed agent, goal, stock structure, and incorporators. Submit the required filing fees and deliver the duly executed Articles of Incorporation to the Office of the Secretary of State or the relevant state authority as mandated by applicable regulations.
  3. Open a Business Bank Account. Create a separate business bank account to keep your business and personal finances distinct. Compare services, rates, and perks by contacting multiple financial institutions. To establish the report, provide the necessary papers, such as the Articles of Incorporation and EIN (Employer Identification Number).
  4. Register for Taxes. Complete Form SS-4 to apply for an EIN with the IRS. Register for your business's applicable federal, state, and local taxes. Consult a tax expert to ensure tax compliance and comprehend the tax benefits of incorporation.
  5. Create Corporate Bylaws. Create corporate bylaws that outline the organization's internal rules and procedures. Discuss shareholder rights, meeting procedures, and director and officer responsibilities. Bylaws serve as a blueprint for governance and aid in maintaining legal compliance.
Meet some lawyers on our platform

Scott S.

41 projects on CC
View Profile

Zachary J.

191 projects on CC
View Profile

Gregory B.

138 projects on CC
View Profile

Janice K.

1 project on CC
View Profile

Obligations and Duties to Incorporate a Business

Ongoing obligations and duties are necessary to ensure your business's smooth operation and legal standing.

  • Ongoing Compliance Requirements: Your business must comply with continuous compliance standards after incorporation. A registered agent handles legal and governmental papers. You must submit annual reports or statements to the state agency with updated business information. These conditions must be met to avoid penalties, loss of good standing, or entity dissolution.
  • Analyzing Annual Reports and Statements: Annual reports or financial statements provide information about a business's activities and structure. Typically, they require the names and addresses of directors or members, the business address, and the registered agent's information. State-specific filing deadlines and fees make it imperative to remain informed and submit these reports on time to ensure compliance.
  • Meetings and Resolutions: As a corporation or limited liability company, conducting regular meetings and recording resolutions is essential. Depending on the state's regulations and your company's preferences, arrangements may be held in person or virtually.
  • Recordkeeping and Reporting: Keeping accurate and well-organized records is essential for corporations. Financial statements, contracts, meeting minutes, and other pertinent documents should be recorded. It facilitates business operations, audits, potential legal disputes, and compliance with legal requirements.

Advantages of Deciding to Incorporate a Business

Incorporating a business brings numerous advantages that can contribute to its long-term success and growth. From providing limited liability protection to maximizing tax benefits, establishing a corporation offers various strategic benefits.

  • Establishing Limited Liability Protection: One of the primary advantages of initiating a business is the segregation of the owner's assets from the liabilities incurred by the business. If the owners get sued or owe money, their assets are usually safe.
  • Maximizing Tax Benefits: Corporations often get tax breaks, such as being able to deduct business costs, use tax credits, and pay less tax overall. But you should talk to a tax expert to understand how tariffs will affect your business entirely.
  • Building Credibility and Securing Funding: Incorporating a business can make it look more trustworthy to customers, suppliers, and possible investors. It could also make getting loans, making purchases, or selling shares easier to earn money.
  • Enhancing Benefits for Employees: When a business is incorporated, it can offer its employees benefits like health insurance, retirement plans, and stock options. These benefits can help get and keep good workers, which is good for the growth and success of the company.

Key Terms for Incorporating a Business

  • Articles of Incorporation: A legal document lodged with the state government to establish a corporation. Includes essential information such as the business's name, purpose, registered agent, and authorized share count. Must comply with the state's specific requirements for incorporating a business.
  • Registered Agent: A person or organization designated to receive legal and other official documents on behalf of a corporation. Serves as a liaison between the company and the government. A physical address in the jurisdiction of incorporation is required.
  • Bylaws: These are the internal rules and regulations governing the corporation's operations. Outline procedures for conducting meetings, appointing officers, and other corporate matters. Customizable and tailored to the business's specific requirements.
  • Shareholders: They are individuals or entities that own a corporation's shares. Vote on the election of the board of directors and issues affecting the corporation—the possibility of receiving dividends and certain rights and privileges.
  • Board of Directors: Shareholders elect the Board of Directors to oversee the corporation's administration. Responsible for making strategic decisions, appointing officers, and ensuring legal compliance. They act in the best interest of the corporation and its shareholders.

Final Thoughts on Incorporating a Business

There are numerous advantages to incorporating a business, including limited liability protection, enhanced credibility, and potential tax advantages. Because each state may have different rules and procedures, it is helpful to undertake thorough research and keep precise records. By grasping the terms and elements discussed in this article, entrepreneurs can successfully navigate the incorporation process and lay the groundwork for future growth and success.

You can click here to get started if you want free pricing proposals from vetted lawyers that are 60% less than typical law firms. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

Meet some of our Lawyers

Daehoon P. on ContractsCounsel
View Daehoon
4.7 (95)
Member Since:
November 26, 2021

Daehoon P.

Corporate Lawyer
Free Consultation
New York, NY
8 Yrs Experience
Licensed in NY
American University Washington College of Law

Advised startups and established corporations on a wide range of commercial and corporate matters, including VC funding, technology law, and M&A. Commercial and Corporate Matters • Advised companies on commercial and corporate matters and drafted corporate documents and commercial agreements—including but not limited to —Convertible Note, SAFE, Promissory Note, Terms and Conditions, SaaS Agreement, Employment Agreement, Contractor Agreement, Joint Venture Agreement, Stock Purchase Agreement, Asset Purchase Agreement, Shareholders Agreement, Partnership Agreement, Franchise Agreement, License Agreement, and Financing Agreement. • Drafted and revised internal regulations of joint venture companies (board of directors, employment, office organization, discretional duty, internal control, accounting, fund management, etc.) • Advised JVs on corporate structuring and other legal matters • Advised startups on VC funding Employment Matters • Drafted a wide range of employment agreements, including dental associate agreements, physician employment agreements, startup employment agreements, and executive employment agreements. • Advised clients on complex employment law matters and drafted employment agreements, dispute settlement agreements, and severance agreements. General Counsel • As outside general counsel, I advised startups on ICOs, securities law, business licenses, regulatory compliance, and other commercial and corporate matters. • Drafted or analyzed coin or token sale agreements for global ICOs. • Assisted clients with corporate formations, including filing incorporation documents and foreign corporation registrations, drafting operating and partnership agreements, and creating articles of incorporation and bylaws. Dispute Resolution • Conducted legal research, and document review, and drafted pleadings, motions, and other trial documents. • Advised the client on strategic approaches to discovery proceedings and settlement negotiation. • Advised clients on employment dispute settlements.

Namrita N. on ContractsCounsel
View Namrita
4.9 (12)
Member Since:
August 18, 2021

Namrita N.

Attorney at Law
Free Consultation
Plano, TX
3 Yrs Experience
Licensed in MN, TX
Mitchell Hamline School of Law

Retired Dentist transitioned to Law, with a special interest in Commercial Real Estate, Startup businesses, Asset Purchase Agreements, and Employment Contracts. I love to help dentists and physicians with legal issues pertaining to licensing, credentialing, employment, and general business-legal questions.

Jane C. on ContractsCounsel
View Jane
4.9 (72)
Member Since:
October 9, 2020

Jane C.

Free Consultation
New York
18 Yrs Experience
Licensed in CT, DC, NY
Pace University School of Law

Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.

Bruce B. on ContractsCounsel
View Bruce
5.0 (13)
Member Since:
January 11, 2022

Bruce B.

Managing Attorney
Free Consultation
Tampa, FL
8 Yrs Experience
Licensed in FL
University of South Carolina

Bruce Burk practice is in the area of small business, labor and employment, contracts, real estate and civil litigation. Bruce has litigated over 40 trials as well as many appeals. He prioritizes client communication and satisfaction as well as delivering high quality work product.

Abraham W. on ContractsCounsel
View Abraham
Member Since:
November 18, 2021

Abraham W.

Free Consultation
Nashville, TN
4 Yrs Experience
Licensed in NY, TN
Harvard Law School

Abraham's practice focuses on counseling emerging group companies in the technology and other commercial agreements, and assisting equity financings (specifically venture capital).

Dave Y. on ContractsCounsel
View Dave
Member Since:
November 22, 2021

Dave Y.

Free Consultation
Colorado Springs
2 Yrs Experience
Licensed in CO
University of Denver

I am available for data privacy and cybersecurity projects. I am CIPP/US certified through the IAPP. I have also taken coursework focused on the GDPR through the London School of Economics. In my past career I was an intelligence officer. I am well acquainted with information security best practices and I have experience developing and implementing administrative controls for classified information and PII. I have worked extensively overseas and I am comfortable integrating with remote teams. Feel free to reach out any time if you have any additional questions on my areas of expertise or professional background.

Peter W. Y. on ContractsCounsel
View Peter W.
Member Since:
January 24, 2022

Peter W. Y.

Free Consultation
24 Yrs Experience
Licensed in CT, NY, PA
Haub School of Law at Pace University

Perceptive, solution-driven counselor and experienced attorney. Record of successful verdicts, settlements, negotiations, arbitrations, mediations, and deals. Effective claims management, litigation strategy, and risk consulting. Proven ability to oversee litigation teams, communicate to stakeholders, manage multiple projects effectively, and expand business relationships. Extensive experience handling legal issues in engineering and construction, environmental litigation, corporate and contractual, and insurance issues.

Find the best lawyer for your project

Browse Lawyers Now
Learn About Contracts
See More Contracts
other helpful articles

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

Need to file articles of incorporation?

Create a free project posting

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city