Congrats! So you’ve made the decision to give your business a formal legal structure.
Perhaps you like the liability protection that comes with incorporation. Or the various ways LLC and S-Corp structures allow you to move income through the business and on to your personal paycheck. Or maybe you’ve got investors on board with you and require a more extensive legal structure.
Whatever your chosen form a business, buckle in because you’ve got some paperwork ahead of you.
Let’s take a walk through the basic business documents you’ll need.
IRS Form SS-4
If you’ve been in business for any length of time, this has already been filled out. It’s the form that gives you an EIN (Employer Identification Number), which is the business equivalent of a Social Security number.
Business Reservation Form
The next step is getting your business name reserved. This is simple enough, but there are a few things to be aware of.
Some states will not allow the use of the plural form of a currently existing business name. For example, a painting contractor won’t be able to name their business “Creative Painters” if another business is already called “Creative Painter” without the “s.” Or vice-versa.
And though it’s not a part of the documentation process, now is also a good time to make sure you’ve reserved the domain for your business website. There’s no point in having a creative business name if you can’t use the URL you want.
Certificates Of Organization & Formation
Now we get into the nitty-gritty of business documents. If you’re an LLC, you’ll have to define your business duration. In most states, you can just mark “perpetual” since you naturally hope your business goes on forever, but a handful of states set limits on how long an LLC can endure before requiring renewal.
You’ll also have to define your ownership, management and registered agent. That means anyone with a share in the business needs to be listed with complete contact information. You must spell out which share of the business each partner owns.
You will also need to document how the business will be run. Is there a board of directors, are you issuing public stock, are you managed by the members, etc.?
Your registered agent is the person who will serve as the point of contact for legal communication. Or, in layman’s terms, it’s who someone contacts if they want to sue you.
In most states, the same online portal containing these documents will also contain tax registration documents. You’ll need to fill these out to deal with employer taxes, sales taxes and any other taxes that might be unique to your particular business entity.
This document establishes the rights and responsibilities of members of a corporation and establishes how profit will be distributed. The most common way is for members to receive their share of profit as income distribution, but there are other ways, depending on how each member wants to handle their tax liability.
If you plan to issue stock, this document will outline the rights belonging to each shareholder. Upon purchase of stock, each shareholder will receive a copy of this document, which will also define the responsibilities of management and the board of directors.
Depending on what business you are in, there are various licenses that may also need to be obtained (i.e. liquor license for a restaurant). And if you think you’re done…well, don’t get your hopes up. States require periodic reports to be filed by incorporated businesses, meeting minutes maintained and basic information confirmed. Some states may require this up to twice a year.