Incorporating A small Business

What Does Small Business Incorporating Entail?

Before you decide on incorporating a small business, there are several issues you need to be aware of.  People think of starting small business ventures as a way of protecting themselves by forming an entity that is legally recognized by the state, and which allows them to manage their assets better. 

In case of a risk or loss, small business incorporating will safeguard personal assets and helps reduce your taxes.

It is important to talk with an accountant and lawyer to know all the details that are involved in how to incorporate a small business. 

Incorporating a small businessTypes Of Corporations

The next important step would be to determine the type of business you desire to establish.  

Will your business be a general partnership or a sole proprietorship.

You can opt for General Corporations, Professional Corporations, Sub-chapter Corporations, Non-profit corporations, Limited Liability Corporations etc. when incorporating a small business.

The type of corporation you choose depends on the number of persons that are involved, the nature of work to be conducted, the size of the business and whether it is a for-profit or a non-profit. 

For example, if you are a doctor or any other professional, then forming a professional corporation might be the ideal choice. Many details need to be considered when incorporating for small business ventures.

The most direct way to incorporate a new business is to log in to your State Department’s web site and complete the online application for incorporation. 

Alternatively, business owners can contact their state's Division of Corporation by mail, courier, phone, or email.

Before You Incorporate

Before incorporating for small business, you need to ensure that the name you have chosen for your business is available. Once you have determined this, you must  reserve the DBA (doing business as) name.  

The incorporating agency will then draw up the necessary “Certificate of Incorporation” and route the “filing” fees to the concerned agencies of the State. This document is the Article of Incorporation which proves the legal status of your business. 

Therefore, if you are interested in incorporating a small business and maintaining your incorporation status, at minimum you must choose a name for the business and decide where you plan to run the operations from.

Some of the main advantages of incorporating a small business are:
  • Continuance – a corporation has a life span that is unlimited
  • Easily raise financing - as corporations can sell shares and equity capital can be raised
  • Controlling Income – which is a tax advantage
  • Employee retention -Employees can be retained by offering them stocks
Qualifying for the Small Business Tax Deduction

Some advantages of acquiring S Corporation status would be no Corporate Taxes, reducing Taxable Gains, and Liability Protection.

The disadvantages of incorporating a small business are an increase in paperwork, not being eligible for personal tax credits, expensive registration fees etc.

If you are committed to the success of your business then you may consider hiring a business coach to help with the incorporation and business set-up process.  Apart from this, a coach will also help you analyze your business and implement a business plan to help you find a niche market, increase your brand’s awareness, and promote your business.

From Incorporating A Small Business to How To Start A Small Business

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