How do you know when the company that you own has become a legal, operating corporation? There is so much jargon tied to owning a company and you can easily get lost among the legalities.
Deciding to incorporate your business includes important business decisions that are best executed with expert legal counsel.
Benefits of Incorporating Your Business
Forming a corporation in Florida has many benefits. From improving the credibility of your business, limiting your personal liability, and protecting the business name from being used by other organizations – a corporation is a smart business move.
Understanding The Term ‘Corporation’
As a broad overview, there are different types of legal business structures in Florida like sole proprietorship, a partnership, and a limited liability company (LLC). Each has its pros and cons. A corporation differs from the other structures as the business is a legally separate entity from its owners.
The business is owned by its shareholders under the governance of an elected board of directors to oversee the organizational activities. The shareholders are the owners and are granted the most amount of protection under a corporation.
Steps To Forming A Corporation
The formation of a corporation is done on a state level, which means that the requirements may vary from one state to another. Generally speaking, a corporation will require the following basic information:
- A legitimate business name
- A board of directors
- The filing of articles of incorporation with the state
- Paying the necessary filing and license fees
- Drafting agreed-upon business bylaws
- Hosting an annual meeting
- Distributing stock certificates
While this is the basic structure, the details of incorporating a corporation in Florida are as follows:
Choose A Business Name
In order to register your business as a corporation, it must have a unique name that is recognizably different from other businesses. The name of the business must include the words “corporation,” “incorporated,” or “inc.” (or their abbreviations).
There are other guidelines for choosing a legal business name in Florida, but the above are good starting points.
Appoint A Registered Agent
You will need a registered agent to complete the process of service. This agent will accept legal papers on the corporation’s behalf if it is sued. The chosen registered agent needs to be a Florida resident or a company that is authorized to operate in Florida.
The registered agent holds the important responsibility of accepting tax forms, service of process notices, and other legal paperwork.
File Articles of Incorporation
This is an incredibly important step in incorporating your business. It involves registering the profit articles of incorporation with the state. There is a list of vital information that needs to be included in the articles from the corporation’s name, to the amount of stock that your business is authorized to issue.
This step in the process requires a filing fee and can be done online or on paper.
Get an Employer Identification Number
An Employer Identification Number (EIN) is the equivalent of a corporate social security number and is needed to track the business’s financial activity. An EIN is necessary to open a business bank account, and so it is wise to sort this out earlier rather than later.
Directors Establish Bylaws
The bylaws are fundamental in establishing basic ground rules for the daily operating of the corporation. They are not filed with the state and are not legally required; however, they help establish general operating rules and show banks (and other financial institutions,) that your corporation is legitimate.
These bylaws are best drawn up with all directors present. During this meeting, the board will discuss the corporate bylaws, issue stock, appoint corporate officers, and establish the business’ financial strategy.
Corporate Records Book
With your important documents, articles, and agreements, it’s important to keep track of all information in a simplified space. Your corporate records book should include your articles of incorporation, EIN, licenses and permits, bylaws, meeting minutes, and your bank records.
The records book is yours to customize, but it is always a good idea to ensure that all documents are centrally located.
Business Bank Account
Opening a business bank account is an important step in creating a corporation to protect personal interests. The board of directors should come to an agreement regarding the specifics of the bank, credit union, and all other details that are needed.
Licensing And Tax
Finally, you need to make sure that your corporation has all of the necessary permits and licenses to operate as a legal corporation. This step is essential so that the corporation can effectively comply with other tax and regulatory requirements.
While incorporating a corporation definitely has its benefits, it is still a process that requires a lot of care and attention. An expert in Florida business law will be able to offer the necessary guidance and advice to ensure that your corporation is incorporated in the most efficient way possible.
At Handin Law, we’ve recently celebrated 50 years of being a member of the Florida Bar Association and during this time, we’ve gained the experience needed to expertly advise business matters in the state. Give us a call at 1-877-815-4560 to help incorporate your corporation.