This article aims at giving you the overall information about Incorporation of Business in the United States. But, before proceeding towards the steps involved in incorporating a business in the US allow me to give you the basic idea of business incorporation and the pros and cons of incorporating it in the US.

What is an Incorporated Business?

Are we talking about one and the same thing when we say Business and Incorporated Business? No! 

There’s a slight difference between the two. The term business is a wide spectrum that covers everything on earth that a person does for financial gain on a regular basis. While incorporated businesses are a small part of that wide spectrum. They are the type of businesses that are registered and recognized by a legal procedure called incorporation. These businesses have a separate legal entity from their owners.

What are the Pros and Cons of Incorporating a Business?

There are benefits as well as limitations of Incorporating a business that you must know before deciding to incorporate your business.

Benefits of Incorporation

· Liability Protection – Unlike Sole-proprietorship and Partnership business your personal savings and properties are protected against business debts.

· Ease of raising capital – When you incorporate your business you no longer remain alone for investing funds in the business. You can raise funds by issuing and transferring shares.

· Enhanced Credibility – Customers, Suppliers and Business Associates all regard incorporated the business as more stable and trustworthy.

· Perpetual Existence – Once a business is incorporated it is not affected by an individual’s presence or absence. The owners, directors, etc. may die or go insolvent but that would not affect the existence of the Business.

Limitations of Incorporation

· The extra burdens of Paperwork – There are lots of paperwork and documentations required by law once a business has been incorporated.

· The extra burden of Tax returns – Your accounting fee will get doubled because you will need to file your personal income tax return as well as tax return for your corporation.

· Extra expenses – You will need to hire professionals to fulfill various legal requirements and so you will have the extra burden of expenses.

· Lack of ownership – Once you incorporate your business, its entity will become separate from yours and so you won't enjoy the level of ownership as enjoyed by sole-proprietors.

How to Incorporate a Business in the United States?

Here is a step to step guide to incorporating a business in the United States.

STEP 1: Naming the Business

Choosing a name for the business is the foremost step, and it becomes much more important when you are planning to incorporate your business. Two businesses cannot have the same name; therefore, this task is not easy as coming with any name that comes first to your mind. You will need to make a list of names for your business and check the availability. When you are planning to incorporate your business in the United States, you can check the availability of the name of your choice using the free tool provided by USPTO. You'll have to register your name with the United States Patent and Trademark Office (USPTO).

STEP 2: Choosing the Business Structure

You need to decide on the structure of business you want to incorporate. If you are a US citizen, then you have three options, but for non-US, there are only two choices of business structure. However, you should consider incorporating your business in the US even if you are a foreigner as US is very liberal about the business persons willing to invest in the US regardless of their citizenship.

The three business structures available for incorporation in the US are:

· Limited Liability Corporation (LLC) – This is the least expensive corporation option which requires comparatively lesser paperwork too.

· S Corporation – The S Corporation gives the benefit of ‘pass-through taxation, ' i.e., you won't be taxed on the business level. The business profits pass through owners and are reported on the individual tax return. However, foreigners are not allowed to incorporate this structure.

· C Corporation – This is the most common type of corporation and is often referred simply as a corporation. These are considered separate entity for taxation purpose also. Hence you will be subject to double taxation, i.e., tax on personal income in addition to the tax on business.

You need to choose any of the structure for incorporation, but you'll always have the option to switch to the other structure in future.

STEP 3: Choosing the State to Apply for the Incorporation

In the US corporations are registered on the state level rather than the federal level. And, all the states have a different set of rules and taxations policies. Therefore you need to choose as to which state you want to register your business.

Delaware, Nevada, and Wyoming are seen as the most popular choices to incorporate a business. These states are considered the most business friendly states.

However, it is suggested to know deeply about the rules, regulations, taxations and all other business-related laws governing different states and make an informed judgment.

STEP 4: Getting a Registered Agent with Verifiable Address in the State

You are free to choose any state for registering your business in the US, but you need an agent having a physical address in that particular state. This agent can be an individual or a company officially recognized by the state. You require the agent to do all the legal paperwork on your behalf.

These agents are not only needed at the time of incorporation but even after the establishment of the business. They will be responsible for taking care of your legal documents including tax documents. They will renew your business license and take care that you are complying with the legal business structure.

STEP 5: Getting the Federal Identification Number

The United States' Internal Revenue Service keeps track of all the business within the federal boundary. For this purpose, it gives the Employer Identification Number (EIN) to the business. It is a mandatory step for incorporating a business in the US.

You need to have Social Security Number (SSN) to get an Employer Identification Number (EIN).

If you don’t have a Social Security Number and if you are not even eligible to get one then you can use Individual Taxpayer Identification Number (ITIN).

STEP 6: Opening a Business Bank Account

You are not allowed to do business transactions in the US if you don’t have a Business Bank Account. No business can be called a business without transactions. So you need to apply for a Business Bank Account as soon as your business gets incorporated.

Different banks have a different set of instructions and the list of required documents. The most important documents that all banks will need you to furnish are:

· Documents that prove your incorporation as LLC or Inc.

· Your EIN or ITIN

· Your Passport

STEP 7: Hiring Professionals like Certified Accountants or Attorney

As a start-up, you might be thinking of keeping your expenses as low as you can. But not hiring a professional attorney and certified accountants can cost you more than the cost of hiring them. There are so much legal proceedings and documents involved in an Incorporated Business of the US that you cannot handle without hiring the professionals.

If you don't want to hire individuals, you also may take help from companies responsible for business filing. These companies can take care of all your varied needs with their well-trained team of professionals.

STEP 8: Branding Your Business

This is no more a secret knowledge that in today's competitive world businesses need to create a brand for them. Even if your business is small branding, it is the call of the time. You might know that branding a business involves a lot of expertise and therefore it has grown in an industry itself.

You can take help from reputed companies like Designhill for one stop solution to all your branding concerns. Apart from the paid services they also provide many free tools for small business branding.

Some of the free business tools provided by Designhill that might interest you are:

· Barcode Generator

· QR Code Generator

· Profit Margin Calculator

· Business Loan Calculator

· Slogan Generator

· Logo Maker

· Business Card Maker

· Banner Maker

· Letter Head Maker

· Twitter Header Maker

· LinkedIn Banner Maker

· Google+ Cover Maker

STEP 9: Staying in Compliance with the Business Law

Your duty towards the law of state and federation of the United States does not end with the incorporation and establishment of your business. In fact there you are introduced to the law with which you have to stay in compliance until you want your business to shut down.

You are required to file reports about your business annually. These reports need to detail your business, its physical location, the registered agent working on your behalf, shareholders and all every year even if nothing has changed.