When you’ve decided to start your own business, there are many different things to learn and quite a few decisions to make even before your company formally opens. You must first decide on which type of corporate structure can most meet your individual goals or needs for your venture. Then, you must learn about the documentation that is needed in order to get your company officially recognized with the federal and state government. In most cases, you may have to pay a nominal fee to get things up and running. Some potential business owners additionally go beyond their own research and hire an attorney or business specialist to help them navigate the first steps of their new companies.
A sole proprietorship is one of the easiest businesses to start. It involves just one person: you. Setting up shop as a sole proprietorship doesn’t require any type of state or federal filing as well. You simply have to consider the nature of your organization and get access to any type of licenses or permits that are required within your industry. Then, you must choose a unique name for your business and focus on registering the title.
If your business plan includes at least one other shareholder or owner, you may want to think about choosing a general partnership as your structure. Like a sole proprietorship, a general partnership is relatively easy to set up and straightforward. There are no official filing documents required from you for the federal or state government organizations. Your company simply needs to focus on securing all required authorizations for the type of business you’re planning on being part of. It is also vital to have a strong partnership agreement between you and the other people involved in the company.
A limited partnership does require specific filing documents before it can officially operate. For this type of structure, you may need to file a Certificate of Limited Partnership with your Secretary of State in your area. If your company is planning to conduct business in more than one state, you must file in all of these areas. Your certificate should include some information about each partner as well as important details about the business, such as its name, address and the time when the partnership could possibly end. The reason for this documentation is to help your partners secure protection from personal liability in case of future problems with the company.
A corporation is formed when you file the Articles of Incorporation in your company’s home state. This structure requires a little more formality beyond the initial document application. After filing, your business must compose corporate bylaws, choose a board of directors and conduct a first meeting in order to put together important company procedures.
Limited Liability Company
When choosing to file as a limited liability company, or LLC, you must prepare a document called the Articles of Organization in your business’ state. Within this document, your company should detail information about your organization such as the name, the length of time for doing business and the location of the principal and the agent. Most experts agree that a procedural agreement should be drafted at this time as well to help lay down the owners’ expectations and outcomes for the business.
Knowing how to file the proper business documents when creating a new company is an important step in beginning a new venture. Filling out the right paperwork and paying attention to your specific location’s requirements can help you avoid making costly mistakes or choosing the wrong type of corporate structure for your business’ particulars. The goal of the perfect structure is one that can help you make the most profit potential without exposing you or your shareholders to high instances of personal liability. This process may not be quick and easy, but it is a necessary step on the road to success.
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