How to incorporate online

Business formation requires many decisions. A central question in determining how to start a business is whether to structure it as a sole proprietorship, some type of partnership, a limited liability company (LLC), or a corporation.

Once you decide to organize your business as a corporation, you need to officially register your corporation with the appropriate agency. At one time, this involved obtaining the necessary paper forms, filling them out, and either mailing or delivering them to the proper state agency. Fortunately, you can now incorporate online.

Online incorporation is relatively easy and quick.

Where to register your corporation

All states, as well as the District of Columbia, have a government agency that controls the formation and registration of corporations and other business entities. These agencies can be accessed through their websites, which provide detailed information about forming a corporation online, including the necessary forms. They will also tell you what fees are charged, and how they can be paid. The incorporation fees vary by state.

In 38 states, corporations are registered with the Department of State or the Secretary of State. In Alaska, with the Department of Commerce, Community, and Economic Development. In Arizona and Virginia, with the Corporation Commission. In the District of Columbia, with the Office of Tax and Revenue. In Illinois, with the Department of Commerce and Economic Opportunity. In Maryland and Utah, with the Department of Commerce. Hawaii, Indiana, Kentucky, Michigan, New Jersey, and Wisconsin have special websites dedicated to forming corporations.

The website for your particular state can be found by doing a search for the state's agency. For example: "Texas corporation registration." Another source is the website for the United States Small Business Administration, which allows you to search for the website for any state.

Some states have special rules and forms for certain types of businesses, such as banks and insurance companies. In some states, you will also need to register with a state taxing authority.

Corporate name check and reservation

Before filing an application to register your corporation, you need to be sure that the name you would like to use has not already been registered. All of the state websites have a feature that allows you to search whether the name you desire has previously been registered. Generally, the identical name, or a name that's so similar that it's likely to be confused with the name, will not be allowed.

If the name is available, you will be able to reserve the name while your application is being processed. Reservation of a name may require payment of a separate fee, so you may wish to just file your application for registration instead. As a practical matter, it's unlikely that someone else will reserve or register the same name, or a similar name, before your application is processed—but it is possible.

Corporate registration

The application form to register your corporation can be completed and filed online. The particular requirements and forms vary from state to state. Reviewing the forms and information on your state's website will tell you what information will be needed to complete the online filing.

Generally, the initial filing document is called the Articles of Incorporation, which typically includes the following information:

• The name of the corporation.
• The address of the corporation's principal place of business.
• The initial number of shares of stock to be issued and the par value per share.
• The name of the incorporator or organizer. This is simply the name of the person filing the application. This may, or may not, be one of the shareholders or officers of the corporation. It may be the name of the attorney, or any other person, filing the application.
• The name and address of the registered agent. This is the person, or company, designated to receive official documents on behalf of the corporation. If the corporation is sued, the court papers will be served on the registered agent, who may, or may not, be a shareholder or officer of the corporation.

Depending upon the state, other information may be required, such as:

• The purpose of the corporation. To allow the greatest freedom, it's common to state the purpose as "any purpose lawful for a corporation."
• The duration of the corporation. Most corporations will list their duration as "perpetual." However, sometimes a finite period is stated. For example, if a corporation is created for the purpose of organizing a concert on a certain date, it may be stated that the corporation's duration ends on some date after the concert.
• The names of one or more directors.
• A copy of the corporation's by-laws.

Once all of the required information is filled in, the application form can be submitted online. The website should indicate the period of time that is typically required for registration approval.

Online incorporation services

An alternative to registering directly with the agency is to use the services of a commercial online service. Such a service will have you fill out an online questionnaire with the details about your company, and will then prepare and file the registration forms for you. It may also perform other services, such as checking the name availability, preparing by-laws, and obtaining a federal tax identification number.

Incorporating online is the easiest and fastest way to accomplish this necessary task.