How to register a company in usa

As a result, their losses cannot exceed the amount which they contributed to the corporation as dues or payment for shares. The economic rationale for this is that it allows anonymous trading in the shares of the corporation by eliminating the corporation’s creditors as a stakeholder in such a transaction. Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller. Another way a corporate structure can be defined is by business divisions. A division of a business is a distinct part of the firm, however the company is legally responsible for all of the obligations and debts of each division. In a large organization, various parts of the business may be run by different subsidiaries, and a business division may include one or many subsidiaries. Each subsidiary is a separate legal entity owned by the primary business or by another subsidiary in the hierarchy.

The actual fees required to incorporate generally amount to several hundred dollars, although the total cost differs from state to state . Hiring an attorney to assist in the process can raise the cost, but several services are available on the internet to assist businesses with the incorporation process. Liability--this factor is often cited as far and away the most important advantage to incorporation. When a company incorporates, the shareholders or owners of the corporation are liable only up to the amount of money they contribute to the firm. Raising capital--incorporation is generally regarded as an indication that the owners are serious about their business enterprise, and intend to devote time and resources to the venture for a significant period of time. This factor, as well as the reporting requirements of incorporation and--in some cases--the owners' more formidable financial resources--make corporations more attractive to some lending institutions. In addition, corporations have the option of raising capital by selling shares in their business to investors.

Often a division operates under a separate name and is the equivalent of a corporation or limited liability company that obtains a fictitious name or a “doing business as” certificate. As many small business owners know, forming a corporation may provide you with limited personal liability for any debts that your business owes. However, incorporating a small business and maintaining it as a corporation is not as easy as just filing a few papers with the secretary of state's office. Along with filing the necessary papers and fees, you will also need to keep very accurate and detailed business records in order to file taxes for your corporation.

An llc is easier to run operationally than a c corporation and has the flexibility of choosing how it wants to be taxed. The main advantage to incorporating is the limited liability of the incorporated company. It's common for small businesses to start out as sole proprietorships or partnerships and become incorporated at some later date. Cost – the fees associated with initial incorporation and ongoing maintenance can put a strain on start-ups. Since the corporation will be a legal entity separate from its owners, separate financial incorporation services and record keeping practices also need to be established. Any corporation--with the exception of banks and insurance companies--can incorporate under section 3 of the model business corporation act.

Once a company has incorporated, stock can be distributed and the shareholders can elect a board of directors to take formal control of the business. Small corporations often institute buy-sell agreements for their shareholders. Under this agreement, stock that is given up by a shareholder--either because of death or a desire to sell--must first be made available to the business's other established shareholders. Unlike a partnership or sole proprietorship, shareholders of a modern business corporation have limited liability for the corporation’s debts and obligations.

You can incorporate your business by filing articles ofincorporation with the appropriate agency in your state. Usually, only one corporation can have any given name in each state. After incorporation, stock is issued to the company's shareholders in exchange for the cash or other assets they transfer to it in return for that stock. Once a year, the shareholders elect a board of directors, who meet to discuss and guide corporate affairs anywhere from once a month to once a year. An llc is a company structure that allows you personal liability protection from business debts.

They are responsible for electing the board of directors and removing them from office. In smaller corporations, the shareholders can give themselves more operational powers by including provisions in the articles and bylaws of the corporation. In most cases, however, it is the shareholder-appointed board of directors that runs the company. Directors are responsible for all aspects of the company's operation, and it is the board that appoints the key personnel responsible for overseeing the business's daily operations. Of course, in situations where only one person owns the incorporated company, he or she will bear many of the above responsibilities.