How to Incorporate a Business
Starting a small business is a step toward financial and time freedom. But if you’re a new business owner, prepare to be faced with a plethora of questions and concerns as you get started. Taxes, payroll, insurance, and millions of other decisions can keep you up at night, and one of the first you’ll have to make is to incorporate or not to incorporate your business.
Incorporation affects many other choices for your business down the road. Still, incorporation isn’t suitable for every business owner, and even if you decide to incorporate, you’ll need to choose from several different options. The decision can be overwhelming, especially if it’s your first time running your own business.
LegalZone provides a simple, affordable way to learn about incorporation options and file for your business. We take the guesswork out of incorporation with straightforward advice, do-it-yourself legal documents, simple filing, and a reduced cost compared to other sites or law offices.
Learn how to incorporate your business, the differences between LLC, C-Corp, and S-Corp, and the simple steps to file your incorporation with LegalZone.
Do I Need to Incorporate?
If you’re the boss and the employee, incorporation isn’t essential. In a sole proprietorship, you and your business are the same things – there’s no legal distinction between the two. Sole proprietorship brings simpler taxes and no legal forms and is the choice for freelancers, coaches, consultants, and the like.
If you’re planning to hire or bring on a co-owner or partner, incorporation is the way to go. Incorporating brings a few valuable benefits to your business, including:
- Contracts signed in your business name
- Tax advantages
- Professional and legitimate business image
- Protection against liability
Although incorporation can seem complicated and challenging to maintain, obtaining this status will protect your business and your profits as your company grows and changes.
What Are My Incorporation Options?
Once you’ve decided to incorporate, LegalZone helps you find the right business incorporation type to set your company up for success. There are three main types of incorporation:
LLC, which means limited liability company, is a structure that aims to protect members, or owners, from liability in the event of legal or monetary trouble. For instance, if the business is sued for a debt, the debt collector can only go after the LLC’s assets.
C-Corp organizations are taxed as separate structures. Shareholders own C-corps, which require a formal structure in which shareholders hire a board of directors, and the board hires the president and other key leaders. Shareholders also must have regular meetings and create and approve bylaws. A C-Corp has longevity; it can outlive you as the owner.
An S-Corp is a tax election that tells the IRS your business should be taxed as a partnership. In this option, you are a shareholder and employee and should pay yourself a salary. For an S-Corp, all the profits, losses are taxed from a shareholder perspective. Payroll taxes can be deducted as a business expense, and extra profits are distributed to shareholders at a lower tax rate.
Each entity has pros and cons and largely depends on your business plans and goals. Our LegalZone experts can provide advice to help you make the right decision for your company.
How Do I Incorporate?
The process of incorporating on your own takes several steps, including:
- Filing articles of organization
- Choosing a Registered Agent
- Deciding Organization management
- Drafting Operating Agreement
- Registering your organization out of state
At LegalZone, we believe Incorporating your business should be simple, accessible, and stress-free. We offer comprehensive services and expertise to support your incorporation at a price fit for a small business. Simply tell us what state you’re in and the name of your business, and we’ll incorporate your company in minutes.
Discover the benefits of frustration-free business incorporation. Click here to learn more.