You have read all the articles and listened to the professionals and you are convinced that it is time for you to establish a corporation, an LLC or possibly both. Now that you have moved passed the decision of needing an entity it is time to answer the question, how do I get started?
When starting your entities it is tempting to take the cheap alternative, which is to form the entities yourself. However, incorporating business entities is not as easy as it sounds. The first step is you must complete the proper application forms required by the state agency responsible for controlling businesses in the state. Once this is accomplished the state agency will send you the articles of incorporation for your entity. This task is generally simple enough however this is still not enough. You will also need a set of bylaws in the case of corporations, an operating agreement in the case of LLC’s and minutes of the initial meetings. These documents will be very important to the future of your business. These documents contain the rules by which the entity will operate. These documents are important for several reasons. Without these rules being properly documented you are left vulnerable to the machinations of a disgruntled partner or employee. It is possible the courts will look at these documents in cases where a creditor is looking to pierce the corporate veil. Often banks and brokerages will want to see these documents before they will allow an account to be opened. Finally, the laws in your state may require such documents to be drafted and maintained.
In business it is important to cut costs. When it comes to forming your entity however, the cheap way could prove detrimental not only to the business itself but, also to you as an individual. So when forming your business structure, it is recommended that you use a professional that has knowledge and will ensure your business's success.
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