If you are a small business owner, you likely began your business as a sole proprietorship. While sole proprietorships are the simplest type of business structure, there is no legal distinction between the business owner and the business. This can prove to be an unwise decision as the business grows. For this reason, many business owners decide to incorporate the business. 

Incorporation can be complicated, and it is common for business owners to have questions about what this process entails. The following provides answers to some of the questions that we hear from business owners about incorporation.

When is it Time to Incorporate?

Some business owners incorporate while they are still in the startup process. One reason for this is that investors often need a startup entity to be a company into which they can place funds. Even if you are not accepting funding from investors, it can still be a wise idea to incorporate at the outset of your business. If you did not incorporate during the start-up process, it is a good idea to incorporate when business is viable.

How Much Does Incorporation Cost?

The costs associated with incorporating your business entity will depend on several factors. Some of the elements that will influence the cost include the amount that you are using as capital and the complexity of the business setup. A knowledgeable corporate lawyer can provide you with a better idea of the costs that you should anticipate.

How Long Does the Incorporation Process Take?

The time that it takes to form a corporation depends on the time of year. Standard filings often takes between four to six weeks, although it is possible to expedite the paperwork at an additional cost. After the articles of incorporation are processed, there are other steps involved that can protract the length of the incorporation process.

Why is Incorporation Helpful?

There are several advantages to the incorporation process. First, incorporation will result in the business becoming a separate legal entity with the ability to act on its own. This means that the corporation will be able to do things like file a lawsuit, open bank accounts, and sign contracts. Additionally, after a business is incorporated, its creditors are only allowed to seize business assets if there is a default on obligations. A corporation can also establish a business credit rating that is distinct from the business owner’s credit rating.

How do You Begin the Incorporation Process?

There are several things to do before filing articles of incorporation. First, you should determine who the owners of the corporation will be. You will also need a name for the corporation. You will need an address and registered agent of the corporation. Besides forming the corporation, you will also need to do things like adopt bylaws, appoint officers, issue securities, and perform several other tasks.

Speak with an Experienced Michigan Corporate Attorney

Incorporation can be difficult to navigate, but an experienced attorney can help. Contact Resnick Law PC today to schedule your free case evaluation.