To create a company, there will be paperwork for you to fill out. If you thought that creating a company is much more than that, rest assured that you can do it, and you can put aside any fears about starting the process. In brief, to start a corporate entity and make the creation of a company official, you will file what is called “articles of incorporation” with a state’s commercial services development.
However, before you file any paperwork with the state government, it is vitally important that you determine the best structure for your company. What we mean by ‘structure” is the legal entity of your company. Essentially, a company is a legal entity in its own right. It has its own tax liabilities (sorry to break the news to you that, yes, you will have to pay taxes on the profits that the company makes). So, you have to pick one of the types of legal entities that are standard.
The different legal entities that exist for a company are:
- LLC (Limited Liability Company)
- Sole Proprietorship
We will explore each legal entity in an upcoming module during Week 2 of this course. Different legal entities have different benefits. For now, we want to leave you with two points:
- The paperwork that you will need to fill out can be as basis as company name, the purpose of the company, the mailing address and who the officers of the company are.
- You will need a written description of the purpose of the company (what the company will do, what the mission of the company is).
- You will need to have picked out the officers of the company, such as you and a co-founder. It is a good idea to have someone in the role of “President” and someone in the role of “CFO” (Chief Financial Officer) and/or “COO” (Chief Operating Officer.)
- We highly recommend that, when you are about to file articles of incorporation to create your company, you seek the counsel of an experienced tax attorney or qualified business lawyer who specializes in creating new companies for entrepreneurs. (More on that in an upcoming module)