Registering a business before commencing operations confers many advantages. It makes your business look more credible to customers and fellow businesses. It also gives some amount of legal protection to shareholders. This article will show you how to incorporate your business in five steps.
1.Choose A Name
The first step of registering your business is choosing a unique name. This name differentiates your company from the competition and gives it a distinctive identity. You must select a name not already registered by another company; you can check corporate registries to confirm this. The name shouldn’t be similar to an established brand or trademark, or you risk paying significant damages for copyright infringement.
The name you choose should be relevant to your industry. For example, Handy Plumbers is an ideal name for a plumbing company. Also, consider if a domain name and social media handle is available for the name you want.
2.Choose Legal Structure
You need to choose a specific legal structure for your business. You have many options, including
- Sole proprietorship: A one-man show with the owner personally responsible for any corporate debts.
- Partnership: This is when two or more people agree to form a corporation and share duties for managing it. The partners are jointly liable for corporate debts and judgments.
- Limited liability partnership (LLP): The same as a partnership, but the partners enjoy limited liability. They are only personally liable to the extent of capital invested in the company.
- Limited liability company (LLC): The company assumes a separate legal identity. The shareholders enjoy limited liability, meaning they aren’t personally liable for corporate debts and losses. An LLC is the most common legal structure for entrepreneurs worldwide. It’s the best option if you plan to raise money from outside investors.
3. Choose Shareholders and Directors
Every registered firm must have at least one shareholder. You’ll choose a total number of shares (share capital) and allocate specific amounts to each shareholder. A shareholder can be an individual or another registered corporation. The greater the number of shares a shareholder controls, the greater their influence over corporate matters.
Every company must have at least one director responsible for day-to-day management and strategic decisions. A shareholder can also act as a director, but a director is not always a shareholder.
You may appoint a corporate secretary who handles administrative affairs and advises directors on regulatory compliance.
4.File Application With the State
The next step to register a business is to apply for incorporation. You can incorporate a business in your state of residence or another state.
You’ll need to provide documentation, including
- Valid identification for all shareholders, directors, and the corporate secretary.
- Proof of a registered office address to receive mail about legal matters. The address will be in public records and should be accessible during working hours.
- Articles of assocation: A legally binding document outlining the rules governing the business.
- Memorandum of association: A document signed by all shareholders declaring their intention to jointly form a company.
You can apply yourself or go through a professional registration service, e.g., Osome. The latter is the easier option, as the service provider will handle the documentation and registration and sort out any issues that may arise.
Most jurisdictions now offer online corporate registration portals, making the process easy to handle.
You’ll wait for a review after submitting your application. If approved, you will receive a Certificate of Incorporation confirming your business is registered with the government.
5.Get Licenses and Permits
After successfully registering your company, you may need to get licenses and permits to start operating. This factor mainly applies if you operate in strictly regulated sectors like law, medicine, food production, insurance, etc. You can consult city, county, and state authorities on the licenses you need to offer products and services.
