Post Incorporation Checklist: Everything You Need to Know
A post incorporation checklist includes the important steps that follow the incorporation of a business.3 min read
Steps to Take After Incorporation
After incorporating your business, complete the following steps:
- Issue the founders stock: The founders often get stock at a much lower cost. It is important to complete this step as soon as possible because the value of the stock can quickly increase, and then the IRS could require the founder to pay taxes on the difference. Collect signatures and cash payments as soon as possible to prevent expensive tax bills.
- File 83 (b) elections: An 83 (b) should be filed with the IRS within 30 days if any stocks are sold.
- Set up a data site: Setting up a data site allows current and potential investors to view the company's legal documents.
- Apply for an EIN: An employee identification number (EIN) is for tax purposes and is required to open a bank account, file taxes, or hire employees.
- Open business checking account/credit card: Opening up additional business accounts limits the liability of the members. Once a business account is set up, members should avoid transferring money between business and personal accounts.
- File state and local registrations: If the business intends to conduct business in any additional states, they will need to register with that state also. Some businesses may be required to also apply for state ID numbers.
- Purchase insurance: Insurance protects the liabilities of the business. Consider purchasing general liability insurance as well as workers' compensation insurance. Additional insurance plans may be needed depending on the type of business.
- Get ready to hire employees: There are a lot of rules and regulations surrounding new employees. For this reason, it is important to understand the laws and local rules.
- Design a capitalization table: This table includes information about the different securities of the company and who owns what. A capitalization table can help to organize the different owners and decision makers of the company, allowing you to make more informed of decisions.
- Hire an accounting service: Your businesses taxes, bookkeeping, and accounting processes are important. In most cases, it makes sense to outsource these tasks.
- Double check all legal documents are filed: Many of these steps require that you file legal documents with the appropriate parties. It is important to double check you have filed all legal documents to ensure your business is legal.
- Classify personnel properly: Ensure you are classifying all personnel properly. For example, the duties and filing requirements of a contractor versus an employee differ.
- Create a stock option plan: A stock option plan allows the company to offer equity when hiring new employees.
- Define website terms: A website is a must in today's business world. Define your website's terms, including the collection and storage of personal data.
- Define commercial agreements: Many businesses rely on commercial agreements. It is important to evaluate and define the specific terms of these agreements. Whether the company sells services or products will make a difference to the specifics of the commercial agreement.
- Draft a non-disclosure agreement: A non-disclosure agreement protects the intellectual property of the business.
- Purchase a corporate seal: Although a corporate seal is no longer required, it does give a sense of professionalism to the business. Additionally, some institutions, such as banks, might require the use of the corporate seal. It often makes sense just to purchase one.
Required Legal Documents
The specific legal documents that need to be filed post incorporation will depend on the business and its services. These are the legal documents that might be required after incorporating your business:
- Action by sole incorporation: This document is almost always required.
- Bylaws: These are also required.
- Unanimous written consent in lieu of the first meeting of the board of directors: This document is required.
- Founders stock purchase agreements: This document involves 83b filings and is not required unless the founders are issued stock at lower costs.
- Intellectual property assignment/bill of sale: This document is only needed when a founder is transferring intellectual property in lieu of stock.
- Indemnification agreements: This agreement should be signed by every director.
- Written consent of stockholders: This document is only used in some situations.
- Stock certificates for founder's shares: This document is required.
- Applicable securities filings for stock issuances: This document is required.
- Form SS-4 (application for EIN): This document is required.
Incorporating a business is not the final step. There are many additional steps that should be completed after incorporation.
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