You Don't Have to Spend a Lot to Incorporate a Business

If you are a small business owner, you may have considered at one time or another whether to incorporate your business or not. Sure, you are tempted by the tax advantages and risk protection that incorporating a company brings, but the costs of a traditional incorporation with an attorney can be prohibitive.

Well, times have changed, small business owner! It is time you reconsider incorporating your business because the Internet has made the whole incorporation process a lot simpler and a lot cheaper.

Incorporate a Business...The Advantages

While incorporation requires more paperwork and expense than a sole proprietorship or a partnership, it offers important legal and tax advantages.

1. Personal Asset Protection

As a separate legal entity, a corporation is responsible for its own debts so that means creditors of a corporation can seek payment only from the assets of the corporation – and not from the personal assets of shareholders, directors and officers.

2. Easier Access to Capital

Raising capital is generally easier for a corporation, since a corporation can issue shares of stock. And, if you’re in the market for a bank loan, banks would rather lend money to corporations than to unincorporated business ventures.

3. Business Credibility

Having “Inc.” or “Corp.” following your business name generally conveys permanence and stability, communicating your commitment to the ongoing success of your business venture.

4. Perpetual Existence

A corporation can continue indefinitely, regardless of what happens to directors, officers, managers, or shareholders, which may enable you to avoid the legal entanglements that might occur with other business structures.

5. Anonymity of Ownership

If you want to open a small business and don’t want your involvement to be public knowledge, your best choice may be to incorporate.

Did you know - In order to create a corporation, articles of incorporation need to be filed with the Secretary of State. Next, bylaws and organizing resolutions must be adopted. A corporation will also need to apply for a tax identification number with the IRS. If you use an online incorporating service, make sure you research them thoroughly. Some incorporation services will only create and file the articles of incorporation, but you'll find others who can prepare and complete all of the required documents for you, including customized bylaws and organizational resolutions. Be diligent in your research, and you'll reap the rewards.

Just a Click Away

You may find much of what you need to incorporate a business with just a few clicks of your mouse. For instance, many online sites now offer sample articles of incorporation forms or templates for a nominal fee. Simply go to your favorite search engine and search for “incorporation template,” “incorporation form,” or “sample articles of incorporation.” You’ll find a number of choices with prices ranging from free for sample “articles of incorporation” to $50 for a customizeable template. Although the price may be right, be advised that this satisfies just one part of the process when you incorporate a business. To be sure, it does not address filing fees (how much and where to file), franchise fees, whether you need a business license, how your state treats foreign corporations, etc.

Alternatively, once you decide in what state to incorporate a business, all you need to do is visit the Secretary of State section of that state’s government website. Most of these websites have sections called Corporate Bureau, Corporation Commission, Bureau of Corporations, or something similar. There you will find the forms you need for incorporating a business along with complete instructions on what is needed to incorporate a business in their state. And many states now offer online incorporation! What’s easier than that?

To incorporate a business can be an overwhelming decision for many business owners, but it is often the wise one. Not only does incorporating a business provide risk protection to its owners, it also provides many tax advantages that other business structures simply do not. Nevertheless, whether to incorporate a business or not must be an informed decision so make sure you do some research on the process. You'll find much of what you need on the Internet. And, nowadays you have many more options than the traditional one using an attorney. What type of incorporation (C-corp, S-corp, LLC)? Will you use an incorporating service or do-it-yourself? Answers to these questions and more will help you choose the option that best suits your business and whether incorporating a business is right for you.

Nate Smith is one of today's premier experts in saving you time and money on common legal matters. Forget the huge attorney fees, Nate will show you how you can incorporate a business, draw up a will, obtain a registered trademark, create a living will, and more, while saving your hard-earned dollars in the process.