It is important for individuals thinking about starting a business to understand the kind of structure their business will have.
For business owners that want their company to someday become a corporation, there are certain steps to take to ensure that this will be possible.
Business owners will need to understand how to incorporate their business. While this can be complicated, understanding the general steps to take will help put the business on the right path to become a corporation.
The first thing to do is to decide on the name for the corporation. The name not only needs to be unique and fit your business, it also needs to meet state rules as well as identify what kind of corporation it is, like an LLC. After naming the corporation, it is best to appoint directors who will be responsible for the financial and policy decisions for the corporation.
Once the name and directors have been decided upon, the corporation will need to file the articles of incorporation with the state. This is a legal document that will have the corporation's name, address and name of directors.
Incorporating a business can be complex but it is very important for business owners to make sure they draft corporate bylaws to make sure everyone is one the same page. Bylaws can be very influential in a corporation so it is important to take them seriously and make sure all of the board of directors agree to and understand the bylaws. In addition to creating bylaws, corporations should also issue shareholder's agreements that explain what happens to someone's ownership if he or she passes away, becomes disabled or leaves.
These are just the basic steps to understand and take when incorporating a business. Business owners should consult a business law attorney to discuss specific issues and details to consider when incorporating their business to ensure a successful future for their corporation.
Source: FindLaw, "How to Incorporate Your Business," Aditi Mukherji, April 16, 2013