If you have decided to start a new business, you should probably consider incorporating it and obtain a legal identity. After the incorporation of a company, the respective business will be considered as a separate entity from the owners. In fact, an incorporated business can own property, maintain bank accounts and even sign contracts as a separate body just like people do. However, if the scale of the business is small, you might need to think if the incorporation is really a requirement.
One of the most obvious and common reasons to incorporate a particular business is to have a limitation for obligations pertaining to the respective business. Once incorporated, shareholders of the respective business can transfer their shares from one to another. It is a good initiative to incorporate a business particularly if you expect to attract external investors. In contrary to the sole proprietary and general partnerships, a corporation can exist even after the death of the founders.
Nevertheless, incorporation of a company costs some amount of money. Apart from that, there are different types of documentation including record keeping and annul reporting associated with a corporation. So, you should seriously consider whether you can tolerate such obligations particularly if you are a small scale business. In fact, the benefits of incorporating a business can significantly vary depending on the situation of the business.
Information you need when incorporating a business (in Article of Incorporation)
- The name of the business
Picking a name for your business is among the very first steps you must make. It should be a unique name. You can check the name you picked with the Companies House and ensure that the name is available. The name of your company should be followed with Incorporated, Corporation or Company (even the abbreviations such as Inc. Co. are accepted).
- Business address
You must provide a physical address for you business upon incorporating. It is the place where you will receive mail (on behalf of the company). Usually, even a P.O. Box is accepted as the business address.
- Decision makers
You must provide a list of decision makers with the articles of incorporation. Basically you would have two types of decision makers, namely directors and incorporators. It is mandatory to list at least one incorporator; he should look after all the documentation. In fact, the role of the incorporator ends once the board of directors assumes their duties.
- Name of the owner(s)
In general, the owners of a particular corporation are considered to be shareholders. They own portions of the respective business in the form of share ownership. It is important to maintain clear and comprehensive information about the shareholders and the shares of the company when you intend to incorporate your business.
Apart from that, you will be asked to provide information such as physical address of the company (with a street address and a name of a person) to receive legal documents of the company. Most of the business owners consider hiring a professional to handle their incorporation related work.