Owning a construction business offers many opportunities for potential liabilities. Project owners/developers may sue for poor quality or timeliness issues, employees may sue for discrimination or site safety issues or subcontractors may sue for slow payment of invoices. Incorporation is one of the best ways to protect yourself, your family, your company and your assets from lawsuits. Forming a corporation is fairly straightforward. Whether you choose to incorporate on your own or hire an attorney to handle the process, incorporation is a smart move.
Complete the application to incorporate. Secure needed signatures from officers and/or directors. Include the required number of copies of the articles of incorporation. Include the required payment. Mail the package to the appropriate address. Many states allow you to choose your date of incorporation within a limited range of dates from the actual date that you file.
Consult an attorney or write your own articles of incorporation. Many state government websites include basic articles that you can modify for your own needs. Typically these include the date of incorporation, a list of directors and officers, the name and address of the registered agent and the number of shares of stock. For your construction company, consider including an indemnity clause that clearly states your officers, directors and shareholders will not be held liable for actions against the corporation. Hire an attorney to review your articles of incorporation.
Determine if you will need stock certificates, minute books, a corporate seal or stationery. Many times, these are not mandated by the state, but may be required by a financial institution.
Determine the state in which you want to incorporate. Some companies choose to incorporate out-of-state due to more lenient requirements, lower costs and more favorable court rulings. It may be beneficial for your construction company to incorporate in the state in which you will be conducting business. If served with a lawsuit, it is more convenient to go to court locally than to travel out-of-state.
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