Keep Personal and Corporate Matters Separate
After you have incorporated your business, it must remain financially and legally separate from any of its shareholders in order to preserve the benefits and protections of corporate legal status. Maintain healthy business procedures like keeping specific records and accounts, filing necessary government documents, and holding regular shareholder meetings or getting written consents or waivers from directors and shareholders.
Get Your Company Name Right the First Time
Choose your company name carefully. If you change it later, you will need to amend your Articles of Incorporation, change your domain name, obtain new listings in telephone and other directories, and purchase new stationery and business documents. Do your homework and get the name right the first time.
Incorporate Where You Do Business
Unless you’re already a big player on the national scene, you shouldn’t consider incorporating in Delaware or Nevada — regardless of their corporation-friendly claims. If you are doing all or a majority of your business in one state, look no further to incorporate. Otherwise, you will end up paying additional fees and filing more paperwork.
Your Company Name and Domain Name Should Be the Same
If possible, your corporate name should bear some relation to your company’s domain name. But because of the international aspects of the Internet, the selection of a domain name increases the possibilities that you will be unable to use your first choice of a domain name.
Hire a Lawyer to Help You Incorporate
A law firm specializing in startup business will generally charge in the $500 to $5,000 range for assisting you with the incorporation process. They can help you fill out the documents necessary for incorporating, explain the process and review the paperwork you have filled out prior to filing. Legal costs will increase if you have multiple shareholders or complicated shareholder arrangements.
Choose the Right Business Structure
If you plan on creating a large company (one that is publicly traded), choose a C corporation, because shares of its stock are most easily transferred. While you might want an S corporation for tax reasons, they are limited to no more than 75 shareholders, all of whom must be individuals. LLCs trump S corporations, since they have no limit on the number of shareholders, and those shareholders can be corporations and partnerships. Generally speaking, LLCs are best for smaller startups and C corporations are best for larger ones.