Background Information
For entrepreneurs dreaming of starting their own company, the notion of what it takes to start and open an Inc. company can be daunting. However, understanding the basic process of how to open an Inc. company can be relatively straightforward if the necessary steps are followed precisely. The legal process of forming a corporation is a way for business owners to separate personal assets and liabilities from their business assets and liabilities. This is important for people looking to protect their personal property should the company cease operations or receive a lawsuit. Incorporating a company can also help business owners obtain access to external capital investments and financial services.
Research and Planning
Before entrepreneurs even begin the process of forming an Inc. business, they should have a solid business plan in place. This plan should include more than just the specific products or services being offered; it should also include market research, potential customer data, and financial projections. Furthermore, potential business owners should consult with an attorney and/or accountant to make sure that they understand the implications of taking the business to Inc. status.
Choose a Name
The Inc. business should be named in a way that preserves the company’s privacy, such as including the owner’s address. Generally, a search of the Secretary of State’s website will verify if a particular business name is available. However, if the name does not include the words Inc. or Corp., these words must be added to form an official corporation. Owners should also check that the name does not conflict with a trademarked name, although registering the business name with the Secretary of State will usually satisfy the trademark requirement.
Draft and File the Necessary Documents
The next step to form a corporation is to draft the Articles of Incorporation, also known as the Certificate of Incorporation. This legal document is filed with the Secretary of State, and it outlines the business purpose, the number of authorized shares, the registered agent’s name, and other important information. Once the Articles have been filed, it is also important to draft corporate bylaws, which provide a framework and structure for the company.
Obtain Licenses and Permits
Depending on the type and location of the Inc. business, business owners may need to obtain state, local, or federal licenses and permits. These documents are especially important for businesses that hire employees, rent or own property, or provide professional services or advice. It is important for business owners to do their due diligence and understand the types of licenses or permits that might be required for their Inc. company.
Conduct Meetings and Record Minutes
After licenses and permits have been obtained, business owners should have their first meeting with the directors and shareholders of the company. During this meeting, an initial board of directors is appointed and corporate bylaws are adopted. Furthermore, the meeting also provides an opportunity to assign roles and responsibilities among the management team, go over the business plan, and discuss the budget for the upcoming year. Minutes for each of these meetings should be taken and kept on record.
Register for Taxes
Finally, business owners will need to register with the IRS to ensure that the company is compliant with federal, state, and local taxes. This includes registering for an employer identification number, or EIN. Depending on the nature of the business, it is also important to register for any other applicable taxes, such as sales and use taxes, excise taxes, and payroll taxes.
Open a Business Bank Account
Having a business bank account is an essential part of the process to open an Inc. company. Not only will this account provide the company with the ability to track revenue and expenses more easily, but it will also provide business owners with the peace of mind that all financial transactions are kept strictly separate from personal accounts. Furthermore, obtaining a business bank account is often a requirement if a business plans to obtain any kind of financing or investment.
Business Insurance and Formation of Other Entities
Finally, business owners should consider purchasing business insurance and forming any necessary other entities, such as Limited Liability Companies (LLCs) or Limited Liability Partnerships (LLPs). This can provide the business with an additional layer of legal protection in the event of any unforeseen circumstance, helping to ensure that the business and personal assets of the owners remain separate and secure.
Financing and Investments
For any Inc. company looking to expand or to access capital, seeking financing or investments is often a viable option. However, having a robust business plan and clear financial statements is an important part of the process. Inc. businesses should consult with business consultants to understand the financing options available that best fit their company’s needs. Furthermore, entrepreneurs should also be prepared to answer difficult questions about the company’s growth, potential risks and rewards, and their prior experience in the field.
Marketing and Branding
A successful Inc. company needs to have a thorough understanding of their target market if they are to be successful. Developing a marketing plan that includes specific goals, strategies, and tactics can help business owners to identify and attract potential customers. Additionally, creating a strong brand identity for the company is also important for gaining recognition and trust among customers. This involves creating a visual identity for the brand, such as logos and color schemes, that will help to differentiate the company from its competitors.
Growth and Expansion
The final step for entrepreneurs to consider is growth and expansion of their Inc. company. This involves analyzing financial statements, market conditions, and customer needs. Furthermore, it also means finding and leveraging new opportunities for growth and investment, such as developing partnerships and exploring new markets, as well as building competitive advantages to help the company sustain its competitive edge in the marketplace.
