There are several important steps to take while starting a corporation. These include deciding what type of corporation to form, selecting a registered agent, and choosing a business name. After you’ve made these decisions, you’re ready to proceed with the formation process. You should then choose a location and register your business with the state. After that, you can issue stock to shareholders. To help you get started, we’ve listed some of the steps you should take to start a corporation.
1. Choosing a Business Name
Choosing a business name is an essential step in creating a new company. A trademark search will reveal if your business name is already taken. If it is, the trademark holder may seek legal action against you. There are registrars such as GoDaddy that can help you find domain names that are similar to your business name. However, if you already have a trademark, it may not be worth it to purchase an alternative domain.
When choosing a business name, choose a phrase or word that people will remember. This word should be short and easy to pronounce. Choose a name that will fit on business cards, signs, and your website. Keep in mind that a long company name might infringe upon trademark rights. If you do not get consent from the owner of the trademark, you could face a lawsuit and be forced to change your business name.
Once you have a list of words, mix them up and brainstorm ideas. Keep in mind the tone and branding of your business as well as its target audience. For instance, you may want to keep it serious while other companies might prefer to use a playful name. Before deciding on a name, let your biases and preconceptions settle, and then begin the brainstorming process again. You may be able to find the right name after some brainstorming.
2. Choosing a Registered Agent
Choosing a registered agent when starting s a corporation is crucial for a variety of reasons. In many states, businesses must file annual reports to maintain their authority to operate. Failure to do so can result in the dissolution of the entity or an expensive reinstatement. Additionally, registered agents can help clients keep track of their documents, which includes state forms and instructions. Many companies opt for nationwide registered agent services. These services meet the filing requirements of multiple states and can also oversee annual filings from one provider. Choosing the right registered agent can help an organization grow and prosper as it operates in different states.
Choosing a registered agent also ensures that a business owner maintains a work-life balance. Mail received by a registered agent is kept separate from personal correspondence. This helps prevent important government correspondence from being missed, such as notices of lawsuits. Failure to comply with such notices could result in a judgment against the business. A registered agent will also be available when an important legal document is served on the business.
When choosing a registered agent, remember that you must choose a reliable company. Unlike an individual, a registered agent may be the only person or business that receives the service of process. While it can be cost-effective to have someone in your company act as the registered agent, you risk jeopardizing your privacy. To avoid any such risk, consider the advantages and disadvantages of each company before choosing a registered agent.
3. Choosing a Location
There are many factors to consider when choosing a location to start a corporation. While federal business laws are the same, regulations for smaller-scale businesses can differ from state to state. For more information on local business regulations, contact your state’s Small Business and Entrepreneurship Council. When determining where to open your corporation, you must balance the needs of your customers and your company’s profitability with your location. It will also take time and patience to find the perfect location.
Once you have identified your target market, choose a location that is in proximity to your competitors. Also, consider the location’s physical structure. Does it make sense for your company to operate in a building that isn’t designed for business use? If so, consider the type of business you plan to operate in and think carefully about the competition in the area. By keeping these factors in mind, you can choose a location that will help your company thrive.
4. Filing Taxes
When you start a corporation, you will need to file taxes. You will need to pay them twice. First, the corporation pays taxes on the profits it makes. This will be a big help when you want to expand your business. Secondly, you will need to pay employment taxes on your salary, since you are an employee of the corporation. Once you have a corporation, you can take advantage of special tax breaks and deductions.
When you file taxes for your corporation, you will need to fill out IRS Form 1120. It is important to note that you will also need to pay the corporate income tax rate on your profits. In addition to Form 1120, you will need to file quarterly payments with the IRS. These payments will be due on the 15th of the fourth, sixth, ninth, and twelfth months of the tax year. These payments will be separate from your personal taxes.
Your business’s activities and size will determine the types of taxes you must pay. You will also have to pay estimated taxes. Some states require an annual filing fee. In California, for example, the minimum fee is $800, but it can reach $11,790 if you make more than $5 million in a year. The amount you must pay depends on the type of business you are starting, and the legal structure of your company.
5. Keeping up with Bylaws
Keeping up with bylaws is a crucial part of forming a new corporation. It is important to have a clear understanding of the purpose and process for approving the bylaws. The process can be lengthy, so the first meeting to make changes should be at least a month before the final approval. You can include a list of changes that have been made, but the final draft should still reflect the changes made.
Bylaws also describe the duties of board members and officers. The articles also explain what is required of board members and shareholders to hold annual meetings. The bylaws also spell out the requirements for quorums or the number of people required to vote. In addition, they should clearly specify how bylaws are amended, as well as the procedures for doing so. Bylaws should be provided to directors and officers and maintained in the business’s location.
It is important to keep up with bylaws when starting a new corporation, as they affect every member of the company’s structure. It is important to have well-thought-out bylaws because they will save you a lot of time and headaches later. For example, the LegalZoom website provides a step-by-step process to create a corporation’s bylaws.