What does it mean to incorporate?
Incorporation is the process wherein a business or company becomes formally recognized by their state of incorporation. When a company incorporates, it becomes a legal business entity set apart from the individual(s) who founded the business. The corporation may be a small business, nonprofit organization, club, or a government of a new city or town.
Is incorporation right for you? Find out in this article on the pros and cons of forming a corporation.
You may be dreading the thought of formally incorporating your business. The lines, fees and forms can seem intimidating. You'd much rather be developing your products or services and focusing on growing your fledgling business, not answering mundane forms and questions.
We get it.
The process can seem daunting and fraught with red tape. Local, state and federal government websites provide murky answers at best. Despite the volumes of information available on how to incorporate a business, there's little actionable help available for starting enterprises. For entrepreneurs, it's often easier to just continue operating as a sole proprietorship and forego incorporation until some future date. In fact, according to the Small Business Administration, over 70% of businesses in the US do just that.
Incorporating your business is vital to ensuring compliance with a variety of laws, each of which differ from state-to-state. More importantly, business incorporation protects you and your personal assets, and depending on the business structure you choose, may even reduce your tax liability.
Don't delay incorporation any longer – let MaxFilings handle all the burdensome legwork of formally establishing your LLC, partnership or corporation.
Should I incorporate my business? What do I gain from doing so?
This line of questioning is common among companies in their infancy. The truth is, many new business owners and entrepreneurs are unsure about business incorporation. The paperwork is tedious and the fees are expensive, especially for a start-up. And while there are several structures to choose from when incorporating a business — limited liability company (LLC), C corporation, S corporation and more — there are several key benefits to taking this important step.
One of the core benefits of incorporating your business is that it separates liability between you and your business. The risk to personal assets is one reason why many people never even start a business in the first place. Incorporating your business provides some legal protection to personal assets like your home, bank accounts and other private property unrelated to the business. An incorporated business, especially a corporation, is considered its own legal entity that's treated separately from the founders, officers and shareholders of the company. This reduces the liability of these individuals.
There are limited exceptions where an individual can be held to account for actions undertaken by the company, but this typically only occurs in cases of willful negligence or criminal activities. Consult with an experienced business law attorney to better understand liability and your business.
Besides protecting your personal assets, other benefits of incorporating your business include:
Overall, if any troubles do arise, an incorporated business is much better equipped to weather the storm.
As with anything, there are some disadvantages or challenges to business incorporation as well.
Although the benefits to you personally and your venture often outweigh the cons, there are some downsides to incorporating that you should know about.
Paperwork can be cumbersome and the fees expensive, especially for smaller businesses. For instance, should you choose to incorporate, you'll have to file articles of incorporation with the state, plus submit the applicable fees.
Certain states levy ongoing fees, whereas other states only charge an initial fee.
Also, incorporating will typically require more record keeping. Depending on the state, a corporation may be forced to meet certain record-keeping requirements such as annual reports, corporate bylaws and meeting minutes.
Other downsides of incorporating your business include:
Putting off forming a C-corp, S-corp or LLC may allow business owners to avoid such documentation and fees in the short-term, but you'll miss out on some of the unique benefits of incorporating.
MaxFilings is an online-based small business incorporation service. We help fledgling enterprises in all 50 states and the District of Columbia navigate the choppy waters of formally setting up a partnership, LLC or corporation. We handle all the filings and other forms needed to get your company off the ground.
We support small businesses through the entire incorporation process:
Once you've incorporated your business, it doesn't mean we go away.
MaxFilings is always available to help your small business ensure legal requirements are met in your state.
Incorporating a business may differ depending on which state you wish to incorporate in. In general, though, the standard process typically looks something like this:
Learn more by visiting our blog and the MaxFilings Small Business Owner's Manual. If you're ready to begin the incorporation process, first check our pricing page for a quote. Simply choose the business structure you want (LLC vs. S corp. vs. C corp.) and the state you wish to incorporate in for a quote.
From there, begin entering your information into our secure, no-obligation system. If you can't finish at once or need to gather more documents, save your information and come back later – you're not charged until you complete the process. Our user-friendly system lets you save your information and come back later to finish – all with no-obligation.
Incorporating your business may seem like a real hassle, but MaxFilings will handle the legwork so you can focus on delivering the best products and services.