Steps to Incorporate Your U.S. Business
A number of legal documents must be generated and filed to get your U.S. subsidiary established.
Always consult an attorney for the incorporation!
Setting up your business in the U.S. means recruiting management and sales staff, choosing a suitable location, researching the market, forging relationships with partners and distributors, and that’s not all. With all these tasks at the top of your to-do list, it’s easy to forget about perhaps the most essential step you must take to get started—incorporating your business as a legal entity.
Although the process is heavy on legal jargon and paperwork, it is also an established procedure with a set number of steps and guaranteed benefits. Below is breakdown of those steps, summarizing what your company needs to do to become official in the U.S.
Consult an attorney: The incorporation process is governed by law and navigating it on your own is not only ill-advised but also unheard of. If you haven’t already done so, seek out a lawyer and be prepared to work with him or her throughout the process of setting up your business. The attorney you chose to hire will guide you through each step outlined in this article. He or she will also be familiar with details that vary at the state level.
File for a Certificate of Incorporation: This document serves as your official license to form a corporation in the state in which you operate. In order to obtain one, your attorney will file paperwork as required by your state government.
Draft a Statement of Sole Incorporator: As is the case in most of these steps, the precise meaning of this document varies slightly by state. Generally, the Statement of Sole Incorporator identifies one or more individuals to serve as officers of your company after it is incorporated.
Draft by-laws: Now it comes time to define some important aspects of how your company will run. Corporate by-laws differ by business, but usually outline topics such as how directors are elected, the manner in which meetings of directors are run, what officers the company will have, and descriptions of those officers’ duties.
Draft an Initial Written Consent of Directors: Here the process becomes more specific. In this resolution, the company’s directors appoint officers for the business, authorize the officers to open bank accounts, qualify the company to do business in other states, and define other measures if necessary. The form is signed in whole or parts by all of the company’s directors.
Order the minute book, hand-seal, and stock certificates: These three items are basic tools for any U.S. business. The minute book is used to keep an official record of corporate business, allowing officers to look back on decisions and transactions when necessary. The hand-seal is used to certify important paperwork such as bank records and customs documents. And stock certificates are issued to company shareholders and certify their stake in the business’ ownership.
Submit IRS Forms SS-4 and 2848: One of the advantages of having an incorporated business in the U.S. is that it is taxed separately and less harshly than you are as an individual. Form SS-4 is used to apply for an Employer Identification Number (EIN), initiating your company’s relationship with the IRS. Form 2848 (Power of Attorney) grants the attorney the authority to submit Form SS-4 on your company’s behalf. Once the IRS issues an EIN number, your company can establish a bank account and payroll service.
Qualify company for business in other states: At this point, your company has completed the process and is officially incorporated. However, this only applies to the state in which you are based. If your company plans to do business in other states, a qualification form must be filed in each state in order for the company to do business there as well.
Once your business is incorporated, your personal assets are legally independent from those of the company, protecting you in the case of a lawsuit or other claim. But the biggest advantage of incorporation may simply be longevity. Because ownership of a corporation is easily transferable, your company is prepared to exist in the U.S. for as long as management continues to do business.
