Blog & Company News

Aug 19, 2011

Nine Incorporation Mistakes to Avoid

Congratulations! You’ve decided to take the next step with your business by incorporating. Now you need to learn about the incorporation process and recognize the options available to you. When going through the incorporation process, avoid these nine mistakes: 1. Thinking your business is too small to incorporate. All business owners can benefit from the opportunity to separate and protect their personal assets from business debts. No business is too small to incorporate or form a limited-liability company. 2. Waiting until the last minute to incorporate. Some state offices have longer processing times than others when it comes to the incorporation process. If you need to have your business incorporated by a certain date, find out your state’s processing time for filing an incorporation document. Call the Secretary of State’s office in the state in which you wish to incorporate, or call a service company that provides incorporation services. Most service companies work with all of the Secretary of State’s offices on a daily basis and are familiar with processing times. 3. Choosing the wrong service company. Finding the right service company may seem difficult. Conduct research on service companies that provide incorporation services. Look for companies that have a long history of providing expertise in the industry, as well as good customer service. 4. Incorporating in Delaware or Nevada just because of their popularity. Most small-business owners benefit from forming corporations or LLCs in the states in which they will conduct the majority of their business. If you expand your business to other states, then you may want to consider registering in Delaware, Nevada, or any other state. 5. Choosing the wrong business structure. Few states permit companies to change from one business structure to another. Before you incorporate, learn the structural differences among corporations, LLCs, and partnerships. 6. Thinking that filing the incorporation document is all you need to do. After you file the incorporation document, you also need to keep your business organized. Some service companies provide bundled package items like legal guides, corporate minute books, and Federal Employer Identification Number (EIN) filing information. 7. Naming yourself as your company’s registered agent. This can be a mistake if you don’t understand what a registered agent must do. For example, a registered agent must be available during all business hours to receive important legal documents. If you run your business from home and leave your house to run errands and an officer comes to your door with service of process, you may run into problems for not being available to receive those legal documents. Some service companies provide registered-agent services and can receive legal documents on your behalf, and they have offices in all 50 states. 8. Being careless when completing your incorporation document. Believe it or not, many people have misspelled their business names or business addresses when filling out incorporation documents. Review all of your information for accuracy before submitting. Some states charge fees to change information on documents after they have been filed. 9. Failing to stay in compliance. Don’t forget about business licenses, annual reports, permits, and tax registration. Many states, counties, and cities have different licensing requirements. It’s important that your business remain in compliance in the state, county, and city where you conduct business. If you are ready to take the next step and incorporate your business, visit The Small Business Authority’s “Incorporate Your Business” page. The Company Corporation® can answer all of your questions regarding the incorporation process and have your entity incorporated in less than 10 minutes! The Company Corporation® furnished this article as part of a series that appears every Friday on The Company Corporation® is a service company and does not provide legal or financial advice. For more information, visit