INCORPORATION

1. Choosing a state to incorporate
You can choose to incorporate in any of the Fifty united states. We recommend Texas because Texas law does not impose an income tax on corporate or individual earnings. There is, however, a franchise tax on businesses that are incorporated in Texas. The rate of franchise tax is far lower than income tax in most states. Franchise tax is based on both stated capital and gross receipts in Texas only unlike income tax, which is based on earnings from all sources anywhere in the World. Although there are other states in the union that do not have state income tax, Texas is one of the most business-friendly states. In any case, we can incorporate your company in any state that you choose. Times for completion of filing and filing fees vary by jurisdiction. Once you have chosen the state in which you want to incorporate and/or do business in, we will be happy to provide you with detailed guidelines for that state. For now, you should remember that incorporating in one state does not mean that you cannot do business in the other 49 states or anywhere in the World. US law on inter-state commerce assures that you can sell and buy products and services in any state. However, if you setup a business office in another state, your corporation may be considered a “foreign corporation” for the purpose of state law and required to obtain a Certificate of Authority to Do Business in that state. Most new corporations will not need that.

2. Choosing a Corporate Entity
Next step is to select a corporate entity. This step is required if you will do business that will have an entity separate from its owners. Examples of these are corporations, limited liability companies, limited partnerships, and associations. You can choose any of these entity structures based on your business vision and needs. In the cases of all of the above mentioned entity structures, the liability of the owners is limited to the amount of their capital.

• Corporations are taxed as an entity, they can own property in their own name, they can sue and be sued, and they have a perpetual life. There can as few shareholders as ONE although the maximum number is limited by state and federal law for privately held corporations. For income tax purpose, small corporations can choose to be taxed like a partnership through a special election with the Internal Revenue Service.
• Limited partnerships require at least one limited partner and one general partner. Limited partners’ have limited liability; articles of limited partnership are required to be filed with the state; and these entities can have limited and/or specific purpose life. These are considered flow-through entities for income tax purposes. All their profits flow through to the partners’ personal tax returns although an information tax return is required to be filed.
• Limited Liability Companies are similar to limited partnerships except they require at least one member, and they can choose to be taxed as a corporation or a partnership.

Each entity type has its advantages and disadvantages. You should carefully consider the type of business, its objectives, its growth potential, your own business vision, and other related factors in determining an appropriate business structure for your business. Consult your legal counsel, who is licensed to practice corporate law, to help you decide if you are indecisive.

3. Choosing a Registered Agent & Registered Address
A registered agent and a registered address is required for all entities that are required to file articles with the state. It is the representative of an entity for the purpose of state law. It is not necessarily the same as an authorized representative holding a Power of Attorney of federal tax law purposes. Corporate records and other corporate matters are held by the registered agent. A registered agent can be a corporation or another person with a permanent address in the state of incorporation. A foreign corporation or a non-resident of the state of incorporation cannot be a registered agent. We can act as your registered agent, if you so desire.

4. Choosing a Type of Business
Whether you sell products or services, you can incorporate in any state as long as your business is lawful in the United States and the state of incorporation. You cannot incorporate an illegal business. Legal defenses, including limited liability and corporate veil, available to incorporated entities may become invalid if the business itself is not legal.

5. Electing Directors and/or Officers
Each corporation is required to have at least one shareholder, one director, and one officer. An officer can hold more than one office. Limited partnerships and limited liability companies have different requirements. If you choose one of those entity structures, we will be happy to assist you in this step.

6. Choosing a Filing Date
This is the date on which your corporate entity will begin to exist and transact business. You can choose a date in the reasonable future but not in the past. Business transactions conducted before the filing date will not be legal for the purpose of state law if you conduct them with a corporate identity.

7. Obtaining an FEIN
Once the filing with the secretary of state is completed and a charter is received, a new business needs to obtain an FEIN from the IRS. We will assist in obtaining this for you. This is the number that the IRS uses to identify your company. You will need it to open a bank account, withhold and pay payroll taxes, and file your income tax returns.

8. Registration with the State of Incorporation
Some states require a separate registration with the state’s Comptroller or Revenue Department. You will need a state tax identification number to file and pay your franchise tax, sales & use tax, or other state taxes. In other states, you require it only if you will be subject to sales tax. We will complete your registration with the state if required.

9. Open a Bank Account
Finally, you will need a bank account to start transacting business. We will assist you in finding a bank that suits your business needs and financial objectives.