Do-It-Yourself Checklist to Incorporate Your Business
A step-by-step checklist to incorporate your business—yourself
Below, you’ll find a simple checklist with step-by-step instructions to help explain how to incorporate your business—yourself. Take a look:
Find a Name
- The first step to incorporating your business is making sure your business’ name is available for use. Fortunately, all 50 states have online databases where you can search for the availability of your proposed name. This search can be found on the secretary of state’s (or your state’s corresponding government agency) website.
- Once you’ve landed on the site, run searches until you find a name someone else hasn’t taken (hopefully, you don’t need to run more than one search).
Helpful Tip: Most secretary of state websites offer or make it sound like you need to reserve your business name. You don’t need to reserve the name. In fact, reserving the name may even slow down the formation of your business entity, as you’ll be required to provide proof that you reserved the business name—a process that is known for being confusing, even to the government agencies requesting the proof of ownership.
Create your Governing Documents
- If you’re forming a corporation, the governing documents are called bylaws. For LLCs, the documents are known as operating agreements.
- Bylaws and operating agreements are not publicly filed anywhere or with any government agency. They are for internal use only, as these documents will serve as the formal guidelines for how your company will handle disputes, ownership percentages, dissolution, losses, profits, everything. And because these documents are so important you want to make sure that you can read and understand everything within your proposed bylaws or operating agreement.
- If your company or corporation is composed of two or more owners, these documents will be vital to your business and at this point you need to sit down with the co-owners to go over these documents to understand everything that each other is agreeing to.
- If you are the sole owner of the LLC or corporation, these governing documents will play a lesser role in your business, as you will be responsible for all the losses and all the profits.
Helpful Tip: If you pay an attorney to create these documents specifically for your business, they will not be cheap. There are free corporate bylaws and LLC operating agreements online that you can download for free. If you choose to use the free operating agreements or bylaws, make sure they are readable and make sense for you and your business.
File the Paperwork
- This is the step that will actually form your LLC or corporation with the state.
- On almost all state websites, you will be able to download a pdf copy of the articles of incorporation (these will be called articles of organization if you’re forming an LLC). The pdf will also include step-by-step instructions to help you fill out the form.
- There are five ways to file your articles: in person, by fax, by email, by mail, or online. Not all options are available in each state. Your state’s website will inform you what options are available. Typically, in person and online filings are the fastest, followed in speed by fax filings. Mail filings are always the slowest, but are just as simple and will work fine.
- Many states will also offer online filing. If this option is available, it is likely the best option, as with each step, the required information will be asked for and explained. These online filings are rarely rejected.
- The information required in the articles varies by state. Typically, you’ll need to list basic information like the company’s name, mailing address, registered agent name and address, as well as the purpose of the company or corporation, and the names and addresses of directors and/or officers, or members and managers if you’re forming an LLC.
- If at any time, you feel confused while filling out the articles, do not decide to leave any section blank. Call the state agency in charge of forming business entities. They have paid staff that will take your call and answer whatever questions you may have about filling out the form (they won’t answer legal advice on what you should do, just how to fill out the form).
- When the state has accepted your filing, they will send a confirmation as either a certificate or a receipt depending upon with which state you filed.
Helpful Tip: If you need your corporation or LLC formed in a hurry, you can pay the state an expedite fee for a faster turnaround. Some states even have instant online filings.
Hold a Meeting
- The main goal of this meeting is to document the funding of the LLC or corporation. The names of the people who exchanged money, assets, or services to the new company in exchange for partial ownership needs to be written down, as well as their percentage of ownership.
- This documentation is typically done on the operating agreement for LLCs, and in the bylaws for corporations. The LLC members are typically given membership certificates. Corporation owners are given stock certificates. These do not have to be physical printed out sheets of paper. If none of these documents are available, you can use a napkin at the coffee house or whatever is handy, but the main point is that this information is documented and all involved receive a copy. This is extremely important.
- Wrap up the meeting by signing the bylaws or operating agreement and any initial resolutions that help determine the members and managers, or the directors and officers, as well as how the company will be governed.
Obtain an EIN
- All businesses need an Employer Identification Number (EIN or FEIN) and yours is no different. Fortunately, the process to obtaining an EIN is painless if you file online and you get the TAX ID number instantly. You can file online here. The best part about filing online is that the IRS website will prompt you to filling it out correctly.
- You can file Form SS-4 via fax, mail, or online.
- The form is only a single page and the information required to complete it is fairly simple. If you know your social security number, what kind of business entity you formed, and your fiscal calendar year (usually begins on Jan. 1 and ends Dec. 31) you’ll be fine. The form also comes with an extensive set of instructions.
Continue Building Your Business
- If you’ve completed all the steps above, a congratulations is in order: you’ve incorporated your business.
Helpful Tip: After forming their first corporation or LLC, many people look at the piece of paper they’ve received from the state and wonder if forming a corporation or LLC is really this easy. Rest assured, the answer is yes.