For a middle class people, starting business like sole proprietorship or partnership is kind of affordable, but they need to face all the liability in the case of any loss or debt. Though the corporate business is quite expensive to start but will make sure that you are not going to liable for any kind of debt in future.
The corporate business, though expensive, but will never cause you liable for any of the legal issues or problems associated with your business. This is the reason why the corporate business is considered as safe kind of business.
And, if the financial problem is not your issues, starting a corporate business is most recommended type of legal firm. So are you willing to start your corporate business but unaware of the steps how to start a corporate business, then this guide is for you.
Today, here in this guide, we are presenting you all the steps in order to start your own corporate business.
How to set up a corporate business?
Following are 7 major steps in order to set up a corporate business:
Select the name and the address for the corporate business
This is the important step where the business owner should choose a perfect and unique name for their corporate business. The unique name of the organization will ease the trademark process.
The state where you want to establish your corporate firm
The next step while setting up the corporate firm to select the state for firm. There is no need to set up your corporate firm only in your home state, instead, you should consider several factors and select the state for your firm wisely. While selecting the state for the establishment of the firm, consider the factors like the location, incorporation cost, taxation rates on the corporation firm, laws related to the corporate firms, and many more.
Choose the corporation type
Businesses are of different types and corporate is a business type. The corporate business is also divided in different type of corporate firm. The next step while establishing the corporate firm is to choose the corporate type. There are different type of corporate firms including the S corporation, Limited liability company, and the C corporation, and many more. Every corporate firms are having their own advantages. The business owner will need to determine the type of corporate firm best suitable for them.
Build the team of the company directors
All the corporate firms need to have a board of the directors. The business owner need to fill the positions of the directors of the company by laws and within the Articles of incorporation.
Select your share type
Two types of shares generally issues by the corporate firms includes the common shares and the preferred shares. The company will have the power to decide the shares they would like to issue in the market.
Get the certificate of the corporate firm
Fill the form in the corporate filling office in the state where you want to set up your firm and get the certificate.
File your incorporation
The last step to set up a corporate firm is to file the incorporation by any lawyer or any other third party service or with the help of any registered agent.
Benefit of setting up a corporate firm:
Here we are listing some of the major advantages of setting up a corporate firm:
The best part of the corporate business is that it functions as a separate entity and thus provide a special layer of protection to the personal assets of the business owner. The corporate business is a kind of separate legal entity and is separated from the personal assets of the business owner. Since, the corporate business is separate legal entity and thus all the debts and the legal issues occurred by or in the company will not impact the personal assets of the business owners. This is why it is recommended to all the business having the power to lawsuit are advised to consult with the lawyers and should consider incorporating their firm. The corporate firms are having the additional security layer for the personal assets of the business owner. Despite of all the security, it is still advised to the business owner to get a business liability insurance in order to avoid all kind of worst case circumstances.
Another major benefit of having a corporate firm is that since the corporate firm is itself a separate legal entity, thus the corporate business will be taxed not the owner. The tax rate on the corporate business are comparatively lower in comparison to the normal tax rates on the human and thus providing the additional benefit in the tax to the business owner. For more tax advantages, it is advised to the owner to consult with their accountant.
It is another benefit associated with the corporate business. The money raising is often a problem associated with the sole proprietorship business and the partnership business. In the sole proprietorship and the partnership business, the owners are liable for raising all the funds for their business. But this is not a issue with the corporate business. With the corporate business, the owner will have the option to sell their shares in the market and easily raise funds in compare to other business structures.
The business types like partnership or the sole proprietorship or any other kind of non corporate business, selling the business is more difficult as they can not be valuated properly. While the value of the corporate business is not based on the owner instead is based on the business itself and thus can be valued easily. This provides an additional advantage on the selling of the corporate business as well.
The bottom line
So this a complete guide on how to start a corporate firms and their advantages!