Hard work and a keen eye for opportunity are vital for business success. However, external factors can contribute to failure. Business structure significantly impacts risk. Options include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Sole proprietorships and partnerships typically don’t require state registration.
Incorporating a business involves several key steps: choosing the corporate structure, selecting a unique business name, determining the state of incorporation, and filing the necessary paperwork.
Because a corporation is a separate legal entity, its name must be unique. Check with the relevant authorities to ensure the name isn’t already in use. Some names may include an extension, such as “XYZ Bank.” The corporate structure depends on factors like plans for raising public capital, the corporation’s duration, its management structure, control preferences, and the desired type of entity (LLC or corporation). S corporations offer a specific tax structure to avoid double taxation.
The process for filing incorporation papers is generally consistent across corporation types. State law requires registration in the state where the business operates. Alternatively, a business can incorporate in a state with favorable tax laws and operate elsewhere, provided it designates a registered agent with a physical address in the state for official communication.
Finally, incorporation is finalized by submitting the incorporation papers, which include business details and registration fees (typically around $400). Processing times vary, and expedited processing is usually available for an additional fee.