If you are looking for protection of your personal assets when starting a business, your best choice is to start a LLC or a corporation. By starting a limited liability company, you will be granted the same protections as a corporation. When starting a limited liability company your personal assets will be protected, if there are business debts and liabilities due the creditors cannot come after you personally. The biggest problem with starting a limited liability company is that not all businesses can be classified as a limited liability company, and the federal government for tax purposes does not recognize LLCs.
The only other option that you have to protect your personal assets when opening a business is to start a corporation. If you plan to start a corporation, the first thing that you will need to do is to learn how to incorporate yourself. Learning how to incorporate yourself is not hard, but it is going to require some dedication and hard work. When incorporating yourself you will need to follow three basic steps, but the steps can get complicated.
The first thing that you need to do when starting a corporation is to come up with a business name and make sure that the corporate name is available. You will need to start by checking that the exact name you wish to use for your corporation is not already in use in the state that you plan to incorporate in. You also want to go through and see if there are any corporation names similar to yours, if so can they be confused with your business. If the answer to that is yes, you will want to seek a different name for your corporation. As a beginning corporation starting the name check process, all you need to do is go to the website of your state’s incorporation agency and type your corporation name into the search bar. The state incorporation website then does the work for you; it will let you know if your corporation name is already in use or if there are any business names similar to yours.
The second step in incorporating your business is to prepare and file all the paperwork that is needed in your state for incorporation. To start corporation paperwork you will need to prepare the Articles of Incorporation. Once you have prepared the Articles of Incorporation, you will need to file it with your State’s Secretary of State and pay any required filing fees. Once that is done, you will need to prepare your corporations by-laws and organizational minutes. These do not need to be filed with the state, but you must keep them with your other business records and produce them if they are ever asked for.
The third thing that you will need to do is to obtain a Federal Employer Identification Number from the IRS. To obtain this number you will need to fill out Form SS-4 and submit it to the IRS. Without the Employer Identification Number, your corporation will not be able to file a corporate tax return for your business.
Once the corporation has been formed, you will need to find out about any annual filings that your state requires. Most states require that you file a statement of officers and directors every one or two years. You should also check to see if there are any other requirements that your state has, so you can remain in compliance with them.
