How to Transition a Dental Office From a Sole Proprietorship to a Corporation

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    • 1). Decide which type of corporation you want your business to become. Small business owners often choose S corporations, which provide liability protection but still allow profits and losses to pass through to owners' personal tax statements. However, you can consider a C corporation, which pays its own corporate taxes. C corporations are better geared for accumulating large amounts of capital and adding numerous shareholders; unlike S corporations, C corporations can be publicly held.

    • 2). Find an available business. Your state's secretary of state maintains an online database of existing corporation names. You must choose a name that isn't already taken. Many states, including California and Nevada, allow you to reserve a name to hold while completing your incorporation filing.

    • 3). Draft articles of incorporation. These form the basic charter of your company, listing basic but critical information including corporation name, registered agent, stock amount, purpose and the name of the incorporator. States have varying requirements, so check with your state's secretary of state for the specifics needed in your state. There are also handbooks on incorporation available in bookstores and public libraries that give sample articles as well as legal forms dealers selling ready-made kits and forms for purchase that include "fill in the blank" articles of incorporation.

    • 4). File your articles of incorporation with your secretary of state's office and include any forms and fees required. Instructions, forms and filing information are available on your secretary of state's website.

    • 5). Write your corporate bylaws. Although you don't have to file them with the state, the law requires you to have a set of bylaws on file at your place of business. Bylaws are a set of rules governing your corporation. Many states, including California, have specific requirements as to what bylaws must contain, but commonly they include a listing of your board of directors -- which may be only you -- provisions for accounting and the creation of a chief executive officer and other leadership positions. A small practice isn't likely to have extensive bylaws -- particularly if you're planning to remain a one-practitioner business.

    • 6). File your official, stamped articles of incorporation when they return from the secretary of state. This document is your official proof of being a legitimate corporation. You will likely need it in the future for legal issues and transactions.

    • 7). Complete an Internal Revenue Service Form 2553 Election by a Small Business Corporation if you want to establish an S corporation. Once approved by the IRS, you will have the ability to pass taxes from your business to your personal return.

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