Step-by-Step Guide: How to Incorporate an Online Business?

Incorporating your online business is an important step to ensure it’s legally recognized and protected. This process involves several key steps to set up your business as a legal entity, which can help with liability protection and create a more professional image. Whether you’re starting a new venture or moving an existing business online, this guide will take you through the important steps to easily incorporate your business.

What does it mean to start a business incorporation?

Incorporating a business means turning it into a separate legal entity, distinct from its owners. This provides benefits like protecting personal assets and offering tax advantages. However, it also comes with downsides, such as increased paperwork and more rules to follow.

Can an online business be turned into a corporation?

The answer is yes. Incorporating an online business involves a process similar to that of a traditional brick-and-mortar business, though there are some notable distinctions to consider.

Choose a Legal Structure

The first step is to decide on the legal structure of your online business. Common options include a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure has different implications for liability, taxes, and management, so it’s important to choose one that aligns with your business goals and personal preferences.

Obtain a Registered Agent

A registered agent is someone or a company chosen to receive legal papers and official mail for your business. Most states require this for incorporation. The registered agent must have a physical address in the state where your business is registered and be available during business hours to receive important documents.

Get an EIN (Employer Identification Number)

An EIN, also known as an Employer Identification Number or Federal Tax Identification Number, is issued by the IRS. It is used for tax purposes and is required if your business has employees or operates as a corporation or partnership. You can go to the IRS website to apply for an EIN online.

File Incorporation Paperwork

The final step is to file the necessary paperwork with the state in which you wish to incorporate your business. This typically involves submitting articles of incorporation or a similar document, paying a filing fee, and complying with any state-specific requirements. This paperwork officially establishes your business as a legal entity in the state.

How to incorporate my store online in the US?

If you are planning to incorporate your business in USA - one of the most strict regulations and serious penalties for non-compliance, there are a few things to remember.

Read more: How To Start an Ecommerce Business for Beginners: 2024 Guide

1. Choose Your Incorporation State

Begin by deciding which state you want to incorporate your business in. While you can choose any state, many businesses opt to incorporate in their home state because it simplifies the process and can be more cost-effective. However, if another state offers more favorable laws or you plan to operate in multiple states, you might choose a different location.

Top States to Consider:

• Delaware
• Wyoming
• Nevada

After selecting your state, you’ll need to register with the relevant state agency, often the Secretary of State, though it could be another department depending on the state. You’ll submit your paperwork and pay the necessary fees, which can typically be done online or by mail.

2. Check and reserve your corporation’s name

Next, choose a name for your corporation. Make sure it’s available by checking with the state agency responsible for business registrations, usually through an online search tool.

For example, if incorporating in Delaware, you can use the Delaware Secretary of State’s business entity search to verify name availability.

You might also need to reserve the name with the state before you complete the registration. This step is often simple and can be done online or by mail. Make sure the name is unique and meets the state’s requirements.

3. Complete the registration

The final step involves officially registering your corporation. This can be done online or by mail, and involves several key tasks:

• File Articles of Incorporation: Submit the Articles of Incorporation (or Certificate of Organization in some states). Include essential details such as:

  • The corporation’s name
  • Principal business address
  • Initial number of shares and their value
  • Name of the incorporator
  • Registered agent’s name and address
  • Purpose of the corporation
  • Names of directors
  • Corporate bylaws

• Create an LLC Operating Agreement: If forming an LLC, this document details the ownership and management structure. It’s not required in every state but is useful for outlining profit sharing and member rights.

• Address Legal Requirements: Obtain an Employer Identification Number (EIN) from the IRS, which is necessary for tax purposes. Depending on your business activities, you may also need specific licenses from your state or local government.

Best 5 online services to help you register your business

Incorporate.com

Incorporate.com has been a cornerstone in the business registration industry since its inception. With decades of experience, they provide a robust range of services designed to make the incorporation process as smooth as possible. Whether you are starting a new business or managing an existing one, Incorporate.com offers comprehensive solutions that cater to various business needs. Their services go beyond just registering your business; they also provide ongoing compliance tools, registered agent services, and expert support to help you navigate the complexities of maintaining a corporation or LLC.

Why choose it: Incorporate.com is ideal for entrepreneurs seeking a well-established provider with a proven track record. Their extensive experience and dedication to thoroughness ensure that you receive reliable and comprehensive support throughout the entire registration process and beyond. With their focus on detailed compliance and proactive customer service, they are a great choice for businesses looking for stability and long-term support.

LegalZoom

LegalZoom is a highly recognized name in the legal services industry, renowned for its user-friendly approach to business registration and legal documentation. Established to make legal processes more accessible and less intimidating, LegalZoom provides many services to address the needs of both new and existing businesses. From incorporation to legal document creation and ongoing compliance, LegalZoom’s platform is designed to streamline the complexities of business operations.

Why choose it: LegalZoom stands out for its ease of use and comprehensive range of legal services. They offer not only business registration but also access to legal consultations and a variety of legal documents. Their in-depth experience and dedication to customer satisfaction make them a preferred choice for entrepreneurs who value both convenience and thorough legal support.

ZenBusiness

ZenBusiness is a modern, technology-driven platform with the main objective is to make the process of starting and managing a business simpler. With a focus on affordability and efficiency, ZenBusiness provides a suite of services that cater specifically to the needs of small business owners and startups. Their platform is designed to make business formation accessible and straightforward, offering a range of features that help new entrepreneurs get their businesses off the ground quickly.

Why choose it: ZenBusiness is perfect for startups and small business owners looking for an affordable and efficient solution. Their cost-effective packages cover everything from business registration to ongoing compliance support. With an emphasis on user-friendly technology and exceptional customer service, ZenBusiness offers a streamlined experience that helps entrepreneurs focus on growing their business rather than getting bogged down by administrative tasks.

Northwest Registered Agent

Northwest Northwest Registered Agent is known for its exceptional customer service and privacy-focused approach to business registration. Specializing in providing personalized service, they offer a range of solutions designed to support businesses throughout their lifecycle. Their commitment to privacy and attention to detail set them apart in the industry, making them a popular choice for businesses that value a high level of individual attention and confidentiality.

Why choose it: Northwest Registered Agent is an excellent choice for businesses that personalized service and prioritize privacy. Their focus on providing high-quality support and detailed compliance assistance ensures that you receive expert guidance tailored to your specific needs. With their strong emphasis on customer service and privacy, they are ideal for entrepreneurs seeking a more hands-on and secure approach to business registration.

BizFilings

BizFilings offers a straightforward and efficient approach to business registration, designed to help entrepreneurs get their businesses started with minimal hassle. Their services are tailored to provide essential support for incorporating a business, including document preparation, registered agent services, and compliance management. BizFilings aims to simplify the registration process with a focus on practicality and ease of use.

Why choose it: BizFilings is ideal for entrepreneurs who need a no-fuss solution for business registration. Their user-friendly platform and practical tools make it easy to handle the essential tasks of incorporation without unnecessary complexity. With a focus on providing straightforward and effective services, BizFilings is a solid choice for those who want a quick and efficient way to start their business.

FAQs

1. How long does it take to incorporate a business?

The time it takes depends on the processing speed of the provincial or federal government. Depending on where you incorporate, it could take a few days or several weeks to finish the registration. Keep in mind that numbered corporations usually get processed faster, while named corporations may take longer due to the need for name approval.

2. What are the costs involved in incorporating an online business?

The cost of incorporating an online business includes a service fee, which typically ranges from $50 to $300. Additionally, you’ll need to pay government fees, which vary by province, and cover the cost of a name search if your business name needs approval, which also varies by location.

3. Do I need a lawyer to incorporate an online business?

No, you don’t necessarily need a lawyer to incorporate an online business. Many entrepreneurs choose to do it themselves using online services that guide you through the process. However, if your business structure is complex or if you want personalized legal advice, consulting a lawyer might be beneficial.

Conclusion

Incorporating your online business is a crucial move for legal protection and operational efficiency. By following these steps, you can ensure your business is set up correctly and ready to thrive. From choosing a state for incorporation to filing the necessary paperwork, each step plays a role in establishing your business’s legal foundation. With the right tools and a proper planning, you can successfully navigate the incorporation process and focus on growing your online business.