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The Basic 3 Step Process of Incorporation: What You Need to Know to Launch Your Business Successfully

To make the process of incorporation easier, it is best to explain it in 3 basic steps. That will make things less confusing.

You can also get the answers you need by emailing or calling me and my legal team. Book a call to speak to us here: https://mollaeilaw.com

Table of Content


No. Content
1. The Basic 3 Step Process of Incorporation: Narrowing Down the Activities
2. Decide Where to Incorporate and What to Name Your Business in Phase 1 of the Process of Incorporation
3. Working in a Pro-Business Climate
4. Establish a Board of Directors and Choose the Officers in the Second Phase of the Process of Incorporation
5. Select a Registered Agent in phase 3 of the Process of Incorporation
6. Other Steps You Need to Take in the Process of Incorporation
7. What To Do Next

The Basic 3 Step Process of Incorporation: Narrowing Down the Activities

While the process of incorporation can become rather involved, you can also make it simpler by narrowing down the steps. 

 

1. Decide Where to Incorporate and What to Name Your Business in Phase 1 of the Process of Incorporation

In the U.S., you have the option to incorporate in one of the 50 states. If you primarily do business where you reside, then it is best to incorporate in the place where you live in phase 1 of the process of incorporation.

That is because a corporation must register as a “foreign corporation” if the business is not registered in its home state. 

Also, you will need to obtain the services of a registered agent in each state where your incorporate outside of your home base. For example, if you primarily do business in California, but wish to do business in Delaware as well, you must register your business as a foreign corporation and obtain a registered agent for that state.

These facts alone may spark some inquiries. If so, contact me anytime. Email sam@mollaeilaw.com with your questions or to schedule a consultation.

Therefore, one of the main things you need to do, before you incorporate, is plan where you want to set up your business. Where do you want to incorporate?

What location will be your primary base of operations? These are important questions to ask if you are serious about incorporation.

Mollaei Law Tip – If your home state features a high corporate income tax or requires high state fees, you may want to consider another place to incorporate. 

Doing business involves more than merely selling products or services, it also requires an active business presence – one that is recognized in states, such as Wyoming, Delaware, and Nevada.

Email sam@mollaeilaw.com or to book a call to speak to us here: https://mollaeilaw.com/start

 

Working in a Pro-Business Climate

Often, it is better to incorporate in a state that provides a business-friendly climate, as doing so can help you save on taxes and more easily maintain privacy. Because of Delaware’s pro-business environment, more than half the companies listed on the New York Stock Exchange are incorporated in the state. 

We can review the pros and cons of incorporating in certain states. Contact me anytime for a business legal consultation. Email sam@mollaeilaw.com.

After you determine the state of incorporation, you can select a unique business name, which you will also register with the state. Before you do this however, you need to make sure the name has not been taken.

You can do this by going to the Secretary of State’s website and performing a search. 

The business name you choose should include “Corporation” or “Incorporation,” or the abbreviation of one of these words. Make sure the name is not misleading in any way but precisely conveys the nature of your business.

Incorporated business names should not include words, like “Insurance” or “Bank”, nor should they closely resemble the name of another company in the state.

Mollaei Law Tip – If the name of your business is connected with providing goods or services, you should consider getting federal trademark protection for your business name. This will ensure that no one else can use the name for a similar business operation. This protects you, as long as someone else has not already chosen a similar name before you.

 

2. Establish a Board of Directors and Choose the Officers in the Second Phase of the Process of Incorporation

The formal process of incorporation also includes selecting a board of directors. This board is established so major business decisions can be made and approved. A director is normally a company officer or shareholder, although this is not a requirement.

Like the representatives in the U.S. Congress, shareholders elect a corporation’s officers. Therefore, each officer serves a limited term. All corporations must have at least one director on its board. 

This may lead you to wonder just what procedures are approved by corporate directors. Directors for a corporation may participate in the following activities:

  • The declaring of stock dividends
  • Electing officers and establishing the terms of employment
  • Amending the corporation’s articles of incorporation or bylaws
  • Reviewing and approving corporate mergers, reorganizations or similar transactions

According to the law, a director of a corporation must owe duties of loyalty and care to the business he or she serves. Therefore, each director must act in good faith when conducting his or her responsibilities. They must also act with reasonable care with the best interest of the corporation in mind.

If a director stands to gain some type of personal benefit from his or her actions for a corporation, he or she must reveal this fact and refrain from voting on the matter.

The board of directors appoint company officers to oversee the daily operations of the corporation. Legally, a corporation must have 3 officers. These 3 officers must be represented by the following:

  • A company president
  • A treasurer or chief financial officer
  • A company secretary

Officers can be or do not have to be company stockholders. There is no imposed limit to the number of officers designated by a corporation. Also, there is no restriction set on the number of offices one person may hold.

Therefore, one person can hold the office of president, CFO, and secretary.

Email sam@mollaeilaw.com or to book a call to speak to us here: https://mollaeilaw.com/start

 

3. Select a Registered Agent in phase 3 of the Process of Incorporation

Next, in the process of incorporation, you need to choose and designate a registered agent. You will not be able to submit the corporation’s articles of incorporation or other paperwork without this service or person in place. 

Each corporation, by law, must have a person or service business, known as a registered agent, in place to receive official correspondence from the state or to receive the notice of being served if the corporation is sued. 

Therefore, the registered agent must adhere to the following stipulations –

  • They must be an adult residing in the state of a business’ formation and have a street address (P.O. Boxes are not accepted); or
  • They must be a business or corporation located in the state of formation set up to provide registered agent services.

One of the benefits of forming a corporation in your home state is that you can have a director or officer of your company serve as the registered agent. However, you will still reap some benefits by using the services of an outside party.

Having a third party serve as registered agent gives you an additional layer of privacy, as the name and address of the registered agent can be publically accessed. Second, no one can serve you directly at home, in case your business is named in a legal action.

 

Other Steps You Need to Take in the Process of Incorporation

Besides the 3 basic steps mentioned above for the process of incorporation, you will need to draft Articles of Incorporation and Bylaws for your incorporated business. The Articles of Incorporation need to be drafted by a competent legal professional, as they represent the charter that creates a corporation. 

Therefore, you need to contact me about creating the documents to establish your corporation. Contact me anytime. Email sam@mollaeilaw.com with your inquiries or to get the legal assistance you need.

The “Bylaws” of a company are used to establish specific rules and procedures to govern the business internally. Therefore, these guidelines are necessary, as they can be referenced in case of an internal dispute or a disagreement in how a company is managed.

Again, you will need to receive legal assistance when drafting the bylaws. Either a member of my legal team or I can help. Book a call to speak to us here: https://mollaeilaw.com.

 

What To Do Next

As you can see, narrowing down the process of incorporation to 3 steps helps you, at least, focus on the main activities of getting incorporated. You will still need the advice and help of an attorney to incorporate your business and run it successfully.

That is where I can be of assistance. Again, email sam@mollaeilaw.com to set up a time for a consultation.

Email sam@mollaeilaw.com or to book a call to speak to us here: https://mollaeilaw.com/start

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