FAQs
What does it mean to be incorporated?
Incorporating a business means turning your sole proprietorship or general partnership into a company formally recognized by your state of incorporation. When a company is incorporated, it becomes its own legal business structure set apart from the individuals who founded the business. Through incorporation, the company's owner or owners create a separate legal entity to transact business. This new business entity corporation or limited liability company (LLC) transforms the way the business is seen through the eyes of the law and often has more credibility with potential customers, vendors and employees.
Note: Technically, being “incorporated” refers to creating a corporation, such as a C Corp, S Corp, or non-profit corporation. However, this term is broadly used to refer to any business that is formed through a state filing, including LLCs.
How does incorporation work?
Wondering how to incorporate your business as a C corporation or S corporation or how to form an LLC? Here are some of the steps included in the process:
- Determine the state where you want to incorporate.
- Decide which business type is best for your business and goals. (You may want to consult with an attorney or accountant.)
- Determine who the directors of the corporation or who the members/managers of the LLC will be.
- Select a registered agent. Your registered agent must be listed on your formation documents. (Articles of Incorporation for a corporation or Articles of Organization for an LLC.) The registered agent is appointed by you to receive important legal and tax documents on behalf of your business and forward them to you. BizFilings includes this service in all incorporation packages.
- Determine which business licenses are required for your business. If you plan to hire employees, you may need a payroll tax registration, and if you are selling goods, your business may also require a sales tax registration.
- Prepare and file the Articles of Incorporation or Articles of Organization per the instructions from the Secretary of State's office. BizFilings handles this step for you, allowing you to concentrate on running your business.
What are the benefits of incorporating a business?
The primary benefit to business incorporation is limited liability. When you own a small business, you will invest a lot of money into not only getting it launched, but in keeping it running smoothly as well. As the owner, you are responsible for any debts and losses your business may accumulate along the way. However, when you incorporate, you are typically only held responsible for the amount of money you personally invest. Your personal assets typically cannot be used to satisfy the debts and liabilities of your business.
View our Benefits of incorporation or Benefits of forming an LLC articles to learn more about limited liability protection and other benefits of incorporating a business.
For a comparison between multiple incorporation types view our article Which Business Type is Right for Me? C Corp, S Corp, or LLC to help with your decision.
