If you are like many small business owners, you love being in control of your own destiny, doing the things you love to do and making money in the process. But the feelings of autonomy and control that inspired you to start a business in the first place can be your undoing if you fail to establish your business as a legal entity.
A corporation is a legal entity that is considered to be separate and apart from the person or people who created and operate it. Incorporating business in New York protects your personal assets from business liabilities, because the business is legally deemed a separate “person,” responsible for its own debts. For many business owners, the protection of personal assets through limited liability is the primary reason they opt to incorporate.
However, there are several other good reasons to incorporate your business:
1.Ability to transfer shares: In a corporation, the rights of individual owners are represented by their shares of stock. A stock certificate is easy to sign over to a new owner, simply by endorsing the certificate. In contrast, changing ownership of a sole proprietorship or partnership may require the retitling of property, the drawing up of new deeds and other cumbersome administrative requirements.
2.Easier to raise investment capital: New investors are more likely to be attracted to a corporation than to a sole proprietorship or simple partnership, simply because of the limited liability and easy transfer of shares offered by a corporate entity.
3.Indefinite lifespan: While a partnership or sole proprietorship dies along with its owners, a corporation can go on indefinitely, as long as its shares are transferred to living shareholders.
How to Incorporate
Many business owners dislike red tape and administrative hassles, causing them to shy away from incorporation. However, incorporating your business is a relatively simple process, especially if you have professional help.
Follow these simple steps to incorporate your business:
1.Choose a unique name for your business that is not similar to an existing corporate entity. Consider the types of products and services your offer, and how well your chosen name will perform on search engines as a domain name for your website.
2.File your Articles of Incorporation with your state’s Department of State, and submit any required filing fees. You can find filing information and forms on your Department of State’s website.
3.Hold an organizational meeting with your shareholders to create your corporation’s bylaws.
4.Request an Employer Identification Number (EIN) from the IRS.
5.Apply for any local business licenses or permits required to operate in your state or city.
6.Pay incorporation fees. Fees will vary, depending on the type of corporation you create.
7.Follow your state’s guidelines for holding corporate meetings and submitting reports.
Although incorporating your business is not overly complicated, many business owners prefer to have a professional service handle the paperwork. You could hire an attorney to see to the details of incorporation, but it might be costly, especially if you are just getting your business off the ground.
At Windsor Corporate Services, we take the guesswork out of incorporating your business by providing all the tools and support you need. Simply choose one of our comprehensive packages, then let us do the legwork. We pride ourselves on quick and accurate service, so you can go about the business of doing business, hassle-free.