Are you among those people who always wanted to have their own business? Read this guide and learn how to start a corporation quickly in a few simple steps.

Some people are born to be entrepreneurs. They see opening of a  company as a worthwhile challenge and nothing can stop them on the way to success. Then again, some others know that having their own business will give them many benefits, but are afraid to open this new chapter in their life.  

According to government data, there is a constant increase in new businesses. No matter which of the two groups you belong to, you must agree that having your own business has many advantages. Apart from being your own boss, it gives you the freedom to set your rules and deadlines, select working hours that suit you, and allows you more spare time to spend with family and friends.

If you have decided to open a company, the first thing you must do as a business owner is to decide on the best way to structure the business. In the US there are several ways to start and operate a business: you can select among a sole proprietor, a partnership, a limited liability company (LLC), or a corporation. If you are a group of people who have big plans for their business, then you should consider opening a corporation.

Why is a corporation a popular way to run a business?

When selecting the best way to operate their business, entrepreneurs are trying to understand which one will suit their needs and give them more benefits.

A corporation is an organization that usually includes a group of persons or a company and is authorized by the State to act as a single entity. It is also recognized as such by law for certain purposes.

It is also easier to raise capital for a corporation than for an LLC. A corporation also enjoys several corporate tax benefits and doesn’t need to pay  self-employment tax, unlike an LLC. Also, a corporation has a more formal management structure and the possibility of unlimited capital generation so it is more credible in the eyes of potential investors.

Several states have created laws to make corporations more attractive for future business owners. Also, non-citizens can start a corporation in the United States if they have a physical mailing address and a bank account in the US.

By keeping in mind that the initial cost of opening a corporation can be as low as $45, depending on the state, then it is a wise business structure to consider.

What are the types of corporation and which should I select?

Depending on your business and goals, you can select among several different types of corporation.

C Corporations 

C Corporations (C Corps) are the most basic and all businesses start with this type. They can be owned by many people and can have an unlimited number of stockholders. C Cops also have a board of directors; they can also be listed on a stock exchange and become public.

S Corporations 

S Corporations (S Corp) are known as unique type of corporatios. They are not a standard business structure, but offer a type of tax status. Their difference from C Crops is that ownership is limited to 100 shareholders and they can pass-through any business income to the shareholders to avoid double taxation.

Professional corporations 

Professional corporations are formed from professionals, licensed individuals from the same field. These are usually groups of lawyers or accountants who want to work together as a business entity for various reasons, including the tax and liability advantages offered by corporations.

Nonprofit corporations

Nonprofit corporations are charitable, educational, religious, or science organizations which do not pay income taxes on their profit. They are formed to use profits for a company’s mission rather than to distribute it to shareholders.

How to start a corporation

The process of starting a corporation requires several steps that should be followed before successfully completing the registration process.

Select a Proper Name

This is a very important step in forming a corporation. You should select a name that is simple and unique but also fulfills any of your state requirements. It must include the word “corporation,” “company,” “incorporated,” “limited” or an abbreviation of any of these terms. There are some names that you should avoid, like those which have words that cannot be used without approval, are trademarks or names which can be confused with the names of government agencies.

To be sure that a trademark or service mark is available, make sure you have checked the Federal trademark Database to make sure that the name you have selected for your corporation is available.

Select a Registered Agent 

A registered agent will conduct the necessary processes on behalf of your business, like dealing with the correspondence and paperwork for the state. A registered agent can be an individual or a business and is a service that is recommended in most of the states to prevent any negative consequences.

Hold an Organizational Meeting 

Holding an organizational meeting is an obligatory process before filing the formation documents for the corporation. The organizational meeting requires the fulfillment of several tasks, including setting the rules which will determine how your organization will run, determining the share structure, and appointment of directors. It culminates with everyone present signing the Incorporator’s Statement.

File the Formation Documents 

File the Formation Documents which cover the basics of your organization with your state. In most states, you can find these documents online.

Identify Your Business Entity 

Get an EIN to identify your business entity. It is used by the federal government and obtained by the business owner of the company to be able to open a bank account, hire employees, and use it for tax purposes.

Once the business is registered, you can open a business bank account, get a business credit card, take out insurance, and sign legal documents on behalf of your corporation.