Post Incorporation 101: What To Do After Forming Your Company

photograph of an entrepreneur with arms raised towards skyscrapers to illustrate post incorporation celebration
The work doesn't stop after completing all the requirements to establish your company. Post incorporation, there’s a lot more still to be done. Read on:

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Entrepreneur.com describes the corporate structure as “perhaps the most advantageous way to start a business.” According to the respected business website, this allows a corporation to “exist as a separate entity” from its owners.

It is, however, worth noting that completing the incorporation or company formation process is merely the first step. It only puts a business at the starting line. The business owners’ responsibilities don’t end there. Moving forward, the newly-formed enterprise likewise needs to meet post incorporation requirements to be able to conduct business.

Post incorporation can be done within or outside your home state

To begin with, you will need to obtain appropriate licenses and permits to operate legally in your chosen location. Entrepreneurs definitely have to do their homework to find out federal, state, and local requirements that specifically apply for their entity type. Besides, post incorporation regulations and laws usually differ from state to state.

photograph of pins in a united states map showing possible states for incorporation
Image source: Unsplash

Now here’s a fact: some states offer better perks to businesses than others. This is exactly the reason why some business owners choose to incorporate outside their home state.

Case in point, the state of Delaware is considered by many as a “tax shelter” because of its corporate-friendly policies.

In an Investopedia post, we read that Delaware does not collect state taxes.

“It doesn’t matter if a company’s physical location is in the state or not,” the finance site points out. “As a Delaware corporation, no in-state purchases are subject to tax. Additionally, no state corporate income tax on goods and services provided by Delaware corporations operating outside of Delaware.”

Again, research is the key to knowing if incorporating in a different state is a good option for your business.

A registered agent can be of great help

If you ever decide to incorporate your company in another state, you should consider hiring a registered agent to represent your company. Working with a professional agent who lives in the state you are incorporated in will be to your advantage. They will receive legal documents and other official correspondence on your behalf pre- and post formation. Plus they’ll help you with necessary filings to ensure that your deadlines are met.

Also, your registered agent can provide you with valuable guidance about post incorporation requirements.

Examples of required licenses and permits after forming your corporation

As mentioned earlier, business formation requirements often vary from one state to another. Of course, the same principle applies to post incorporation. Plus, regulations depend not only on your location but also your industry.  

In Delaware, for example, common requirements include (but are not limited to):   

  • General business licenses
  • Tax registrations
  • Employer registrations
  • Public health permits
  • Environmental permits
  • Occupational and professional licenses
  •  Liquor licenses
  • Lottery licenses
  • Zoning and land use approvals
  • Building and occupancy permits

Compliance is definitely a must because businesses that fail to obtain necessary licenses and permits can expect fines and penalties. In some cases, authorities may even order the business’ closure.

Other important post incorporation requirements

Here are other essential post incorporation activities to do for the benefit of your business:

1. Get an Employer Identification Number

First and foremost, you need to apply for an Employer Identification Number (EIN). You will use this for filing taxes, opening a business bank account, hiring employees, getting licenses, and more.

The official US Small Business Administration website explains that an EIN is “a unique nine-digit number that identifies your business.” The agency further adds that EIN is necessary for “any business that retains employees” and even for “non-employers (who) operate as a corporation or partnership.”

2. Open a business bank account

Creating a business bank account is a must. Doing this allows you to separate your personal and company finances, which makes accounting much easier later on. Moreover, it gives you a professional reputation as you can accept and make payments using your business name, instead of a personal account.

3. Purchase business insurance

Insurance is a necessity that is better to have and not need than not to have and eventually need. It functions as your safety net when hard times come but you have to be wise about it.  

As the US Chamber of Commerce warns:

“Ending up under-insured exposes you to a potential financial disaster. Or, on the other hand, you could end up paying for expensive insurance you don’t really need.”

Some corporate insurance options you can check out include the following:

  • Property insurance
  • General liability insurance
  • Business vehicle insurance
  • Workers’ compensation insurance
  • Product liability insurance
  • Professional liability insurance
  • Business owner’s policy

4. Seek help from the professionals

Lastly, keep in mind that you don’t have to run a one-man show. Achieving success is often a team effort so don’t hesitate to work with people who can help you achieve your goals.

Aside from hiring competent employees, you may also consider outsourcing some tasks necessary to keep your company running. You can get freelance graphic artists, social media managers, ghostwriters, and other professionals. On top of that, you also need to consider working with lawyers, accountants, registered agents, and others.  

Final thoughts

With these simple but proven practices, your business can make the most positive start. And by exerting the initial effort, you ultimately get to achieve the success you’re aiming for.

To quote former US Defense Secretary Colin Powell:

“A dream does not become reality through magic; it takes sweat, determination, and hard work.”

Featured Image: Unsplash

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