Incorporation Services
If you’re contemplating launching a new business, it’s wise to discuss all of your legal and financial obligations with a trusted advisor like an attorney and accountant. Doing so will help ensure you’ve covered all your bases, are operating your company legally and sets your new business up for success.
To help you get a grasp on some of the things you might need to consider, we’ve created a helpful guide and checklist to get you headed in the right direction. This is not meant to be legal advice, but hopefully, it will give you some initial insight to prepare you for your journey into entrepreneurship.
Building Your Team of Trusted Advisors
Accountant
Bookkeeping, tax planning, cash flow optimization
Attorney
Operating agreements, contracts, NDAs, and other reements
Bank
Loans, credit lines, and billing services
Information Technologist
Set up and manage hardware and software
Insurance Agent
Evaluation and management of business insurance
Marketing Consultant
Strategy, design, and implement of marketing initiatives
Select a Business Entity Type
Once you have decided on a name, you should determine the best form of legal entity for your business. There are many choices, including forming a C or S corporation, forming a partnership or limited liability company, or operating as a sole proprietorship.
Your choice of business structure will have an impact on these and other aspects of running your company:
Who qualifies to own your company
Whether you can transfer ownership of your company
Taxes your company is subject to
Your ability to get credit and funding
Your personal liability
The number of ongoing compliance requirements you need to satisfy.
Some of the factors that will influence which business entity type you select include:
Where you plan to conduct your business
Wanting to have limited personal liability for your business activities
Whether you will have a partner or an investor
Your expected earnings and deductions
Desire to minimize your self-employment tax obligation
Your business goals
Your tolerance for compliance formalities
Registration and administrative costs to set up and maintain a business structure
The business structure you choose for your business will affect your income tax obligations, legal responsibilities and liability, and the degree of complexity involved in operating your business.
It’s an incredibly important decision that deserves thought, research, and help from legal and accounting professionals who can offer expertise and guidance.
Here’s a brief overview of the most common business entity types to consider for your new business.
Sole Proprietorship
In starting a new business, your state will consider a single-owner (or married couple-owned) business a sole proprietorship by default unless the owner files paperwork to register the business as a formal legal entity (e.g., limited liability company or corporation).
Partnership
When two or more people launch a business together, they are considered a general partnership unless they register their company as a legal entity.
LLC
A limited liability company (LLC) may be a single-member LLC (when there’s only one owner) or a multi-member LLC (when there are two or more members).
C Corporation
Growth-focused entrepreneurs will want to consider a C corporation. The C corporation is a more complicated legal structure with more registration paperwork and ongoing compliance filings.
S Corporation
An S corporation status is a special election an LLC or C Corp can request with the IRS. For an LLC, S corporation election means its owners will only have to pay self-employment taxes on their wages and salaries from the business. Any income paid to them as dividends will not be subject to social security and Medicare taxes.
Professional Corporation
Individuals who provide a professional service can also benefit from forming a professional corporation. Where a business provides a professional service, most states have special filing requirements when incorporating.
Nonprofit Corporation
A nonprofit is an entity type that is created for charitable, educational, or other purposes such as religious, literary, scientific, or public safety. A nonprofit operates tax-free and any surplus cannot benefit the owners directly.
