By Deborah Sweeney
You can benefit in many ways when you incorporate your business. Your taxes will be lower, you’ll protect your personal assets, and you will give your business a sense of legitimacy that your customers and partners will appreciate.
Assigning an entity to your business is a big decision that shouldn’t be taken lightly. Two of the most popular entity choices are the LLC and Corporation, but keep in mind there are different tax implications that go along with each.
In a Corporation, only salaries are subject to taxation, but an LLC is subject to pass-through taxation, meaning the entity is only taxed once, whereas a Corporation is taxed on two separate levels.
When incorporating your business, there are three different ways you can go about filing. You just need to know your options.
1. Do it yourself.
Lots of entrepreneurs like this option because it can save money and cut out the middle man of hiring a service. Really, all you need to do is go down to the Secretary of State’s office, do some paperwork, and pay your incorporation fee. But, as easy as that sounds, problems often arise.
When doing everything yourself, make sure that you’re educated on all the necessary rules about corporate governance. Otherwise, be prepared to pay some hefty fees down the road.
Additionally, there’s a chance that you won’t pick the right entity for you and your business (again, do your research). You wouldn’t want to miss out on any obvious benefits or pay unnecessary fees.
2. Hire a lawyer.
Another option is to hire a lawyer to help incorporate your business. A trained lawyer can help you make an educated decision about which entity is best for you and your business. A lawyer will also help prepare the paperwork.
Keep in mind, that although a lawyer can provide advice and perform certain tasks through the life of your business, you’ll still need to hire outside help for some of your business’s upkeep (for example, hiring an intellectual property specialist).
You’ll also want to understand just how your lawyer is going to charge you for services. Some lawyers charge a flat, one-time fee for incorporating, but be sure to ask if that includes fees such as overnight courier charges and other out-of-pocket expenses.
3. Let a service handle the paperwork.
Hiring a service to incorporate your business is often a good compromise between doing it yourself or hiring a lawyer. A service provider will walk you through all of the paperwork and make sure nothing’s left out, helping to make sure you won’t have to pay any sort of penalty fee
Most companies also offer several other services useful to the maintenance of your business throughout its entire life.
And although most services cannot legally advise you on the specifics of which entity to choose, many of them have blogs and other educational tools available so you’re able to make the best decision for yourself and your business.