Business owners are wise to carefully consider various business structures before incorporating their business. There are many benefits to incorporation, including protection from liability. But which option is best for your business? The answer depends on your business interests.
What happens after incorporation?
The incorporation process itself can range from the relatively easy sole proprietorship to a more complicated corporation. For those who choose to incorporate their business as a C Corporation, it is helpful to prepare for the following steps after incorporation is complete:
- Get in line with the IRS. Arguably one of the most important steps involves getting a tax ID with the Internal Revenue Service (IRS). This is generally done through the agency’s website. It is important as it allows for the business to have its own bank account, a requirement for corporations. Once this is prepared, begin paying taxes. The business will likely need to pay the IRS and local tax authorities’ payroll, income and estimated taxes.
- Consider compensation. It is important to set up a process for compensation. It is generally wise to set up the corporation to provide a reasonable compensation rate for your services. This compensation is subject to payroll tax obligations. Shareholders can also receive a dividend, not subject to payroll taxes.
- Hold necessary meetings. The government expects corporations to meet certain obligations in order to receive the benefits that come with this designation. This includes holding certain meetings. As such, it is generally wise to schedule a shareholder meeting. Have someone take minutes and keep a record of the meeting in case of an audit.
Incorporation can take time and a great deal of paperwork. An attorney experienced in business formation and the laws and regulations that surround this area of the law can help to ease the process and better ensure your business’ interests are reflected within the chosen business structure.
