How to Incorporate Online: Everything You Need to Know
Wondering how to incorporate online? Your ability to incorporate a business online depends on your state.3 min read
Wondering how to incorporate online? Your ability to incorporate a business online depends on your state. Some states allow you to file your Articles of Incorporation with your Secretary of State electronically. Other states do not have an electronic filling option.
Preparing for Incorporation
If you want to incorporate a business, you would need to file formation documents known as Articles of Incorporation with your Secretary of State.
Before you file these documents, however, it's important to make sure that your business is ready for incorporation. Setting up a corporation before filing its formation documents means your company will be able to hit the ground running once it is actually established. Some of the tasks involved in setting up a corporation include:
- Naming your company.
- Appointing a board of directors.
- Drafting corporate bylaws.
Choosing an appropriate name for your company is one of the most important parts of incorporation. The name that you choose should relate to what your corporation does and should be memorable so that customers will easily associate your name with your company.
When choosing your name, make sure you understand the corporate naming requirements in your state. In most states, you'll need to include a designator of your corporate status in your name, such as Corp. or Inc. Some states also prohibit the use of certain words in the name of your company. For instance, you usually cannot use a word that would give the impression that your corporation is government affiliated.
If there's a name you're interested in using, you should make sure that it's available by searching the registered business name database in your state. You can also search the United States Patent and Trademark (USPTO) database to determine if your desired business name is already trademarked.
In some states, you may have to reserve or register your corporation's name. Generally, this involves submitting a registration form and paying a nominal fee.
Picking a Tax Status
After you've chosen a name for your company, you will need to decide how you want your corporation taxed. Your company can choose taxation as a traditional C corporation or as an S corporation. Whichever option you choose, the owners of your corporation will enjoy limited liability for the company's debts.
There are some important differences to consider between these two taxation options. For federal tax purposes, S corporations are a type of pass-through entity. This means that the corporation does not pay taxes directly. Instead, the profits and losses of the company are allocated to shareholders, who will then report these amounts on their personal tax returns. To qualify for S corporation tax status, your company must have less than 100 shareholders.