Papers Needed to Incorporate a Business in USA.
Author: Jyoti Jha Chaudhary
Incorporating a business means separating the business
entity from the owner. A legal entity separate from its owner and authorized
to have much number of shareholders is called a corporation. It is a
form of business in which the owner has limited liability and the business
entity has unlimited life, extending it beyond the life of the owner.
Unlike sole proprietorship and partnership it protects the owner from
having his private properties at risk if anything goes wrong with the
There are three incorporation options available for a business owner:
(a) C – Corporation: A regular corporation
or C-Corporation facilitates limited personal liability to the owner
and he doesn't use his personal income tax return to pay tax on the
profit from the corporation. Rather the corporation itself pays out
the cash to the government at the lower rate than what the owners of
other forms of businesses pay. Setting up a corporation means a fair
amount of paper work. Lots of legal formalities are to be rendered before
starting a corporation.
(b) LLC- Limited Liability Company: Like
corporations, LLCs facilitate limited liabilities to the owners but
as far as tax payment is concerned, LLCs are more like partnership firms
as owners report business income on their personal tax returns. This
type of business arrangement does not require as much legal formalities
as other forms of business require. This is a reason why it can be a
good choice for a new business.
(c) S-Corporation: An S-Corporation is
a corporation that has elected a special tax status with the IRS (Internal
Revenue Services). This tax treatment allows the income of the corporation
to be treated like the income of a partnership or sole proprietorship;
the income is transferred to the shareholders. Thus, shareholder's individual
tax returns report the income or loss generated by an S corporation.
Like an LLC, an S-corporation provides all the limited liability of
a regular corporation, while the owners are also taxed for business
income. But unlike an LLC, S-corporations must first be regular corporations
before applying for this unique tax-paying status and continue following
all other corporate regulations. All of this indicates that an S-Corporation
business structure requires careful consideration and even expert advice
In order to qualify for S-Corporation status, the corporation
must be a U.S. corporation with not more than 75 of shareholders. It
can have only one class of stock. The shareholders must be individuals,
estates or certain qualified trusts, who/which consent in writing to
the S corporation election. The shareholders can not be non-resident
The exact papers needed to be files to form a corporation
depend on the laws of the state of incorporation. But the most common
and demanded paper is the Article of Incorporation.
(1) Article of Incorporation: The Article of Incorporation state
the primary rules that governs the management of a corporation. A corporation
becomes active on the date that the applicable governmental office in
the state of incorporation accepts the Article for filing. Filing an
Article of Corporation may cost between USD 80 to 800.
(2) Proof of working officers: Proof to show that the company
is run by officers having positions of President, Vice-President and
Secretary, is required.
(3) Fictitious Business Name Statement: Fictitious Business name
statement is required to be files. This is also known as DBA which is
a short form of "Doing Business As". The governments rule to file DBA
is based on the reason that in case of any dispute, legal problems it
is easy to keep track of companies by the government authorities. But
it also helps to have other licenses and permits like opening a business
checking account. This is to be filed to the county clerk of the county
where the incorporation is to be started.
It is wise to have a registered agent who provides a registered
address for the receipt of legal papers. A registered agent also serves
as a local contact for the Secretary of State and other government agencies.
The registered agent receives notice of any suits, tax notices, etc.
and then forwards them to the corporation. However one can become his
own registered agent as long as his address is within the state in which
the incorporation is to be established. Additionally, there are various
sites which help incorporating online without having an attorney.
Published by Himarticles