Over the past two weeks I’ve been using Legal Zoom to incorporate a new small business and have been posting the progress. We are now at the stage of the process where we are defining principals. It asks for the director, the president, the treasurer, and the secretary. Did I say I was starting a small business? I am! All those people are me, and there’s nothing wrong with that when you’re first starting out. These are the same answers I provided back in 2003 when we incorporated Outskirts Press, and now look at it – a back-to-back-to-back Inc. 5000 honoree of the fastest-growing companies in America. So, you just never know…
If you have other people involved with your new small business, you can certainly enter them instead, and the screen on Legal Zoom even has space for additional officers if you have established those already, although you can leave that optional section blank if you want.
…And that brings us to stockholders… Here’s where you divide the number of shares you set on the previous screen among the principals of your company. Since it’s me, myself, and I, I am the sole stockholder with 1000 shares, each of which is worth $0.01 so I will be providing a capital contribution into this company in the amount of $10 in cash (if you’re in Texas, you have to contribute more). Offer your address again and then declare whether you have a joint owner. If you’re married, the answer to this is probably “Yes” but that’s between you and your spouse.
Next you provide some contact information for the IRS. All pretty self-explanatory. Finally, this screen asks you if you will be operating under a trade name. In most cases, you might answer “No,” but if you think you might have one or more DBAs (doing business as), then answer “Yes” here, although be prepared to provide your different trade name on the next screen. Lastly, Legal Zoom asks if you are planning on hiring any employees in the next 12 months (and if so, be prepared to say how many from among three different categories). It’s easiest to say no to both of these since answering “No” doesn’t prevent you from starting a DBA or hiring someone if you need to.
If earlier in the online process you requested Legal Zoom to complete your Federal Tax ID application for you, the next screen covers that information, which we’ll cover next time…
President of Outskirts Press 