By: Ryan C. Young, Esq.
Why should you incorporate your business?
There are many reasons to do so; the top reason is incorporation provides owners, members and manages of companies with limited liability. Simply stated, the personal liability that the corporation(s) already have is restricted only to the capital that they have invested. If the corporation (or LLC) goes files for bankruptcy, the individual owners, members or managers do not lose any assets or property greater than what was invested into the corporation. Here are a few steps to get started if you a have a company that you wish to incorporate. The steps of incorporation may seem tedious, but they should be followed closely to avoid personal liability.
Name, State and Registered Agent
You need a name for your company and you need to decide where (location) you want to incorporate. After having chosen a name and a state you will then need to find out if a title is available. In Virginia, you must contact the Virginia State Corporation Commission regarding the availability of a name.
Most small businesses will want to incorporate in the state they are physically located.- In addition, you will need someone in-state to serve as the “registered agent” for your corporation. My law office is willing to serve as the registered agent for our clients. This saves you the hassle of having to broadcast your personal information.
Documentation
Once you have received confirmation from the Virginia State Corporation Commission that your corporate name is secured, you will want to draft and execute the various documents required for the particular corporate form you chose (LLC, Corporation, Limited Partnership, etc.) The required documents vary depending on your situation. However, typically included are: certifications, bylaws, board of director resolutions, membership agreements, buy-sell agreements and stock certificates.
Once again, it is important that these are completed correctly. Sure, you could save a little money now, but it may end up costing you much more if something is done incorrectly.
Checking Account/Accounting Systems
Your final step is to open a separate business checking account for your company. It is very important that you do not commingle your personal funds with the funds of the corporation.
Developing a relationship with an attorney and an accountant pays dividends down the road. It is important to have a working relationship with professionals who will ensure that your personal finances are protected.
In addition, contact the various governmental agencies for your locality to see what special licenses or taxes are required.
Let the world know of your corporate existence!
This is the final and most crucial step. Those who do business with you MUST know that you are a corporation. Your name must include one of the following: corp, co., limited, llc, etc.
You must also ensure that you are not signing any agreements in your own personal capacity. I have seen many individuals personally bind themselves to contracts because they did not follow the appropriate rules.
Conclusion
On the whole, incorporating your company can seem like a daunting task. However, try to be patient and stick with it. In the end, you will be protecting your own individual assets and property. If you have any questions, please do not hesitate to contact my office. I am able to assist with throughout the life of a company.
NOTICE: The above information is general in nature, and is offered to increase public knowledge and awareness. It is not designed to provide advice on specific case situations. Contact Ryan C. Young to explain your unique situation.
My law office provides legal counsel to small business owners in the Richmond metro area and throughout Virginia.
Law Office of Ryan C. Young, PLLC | Richmond, Virginia | Attorney