Why Incorporate or Form an LLC?

Learning all you can about the incorporation process is a wise move when planning for the health and success of your new company. Our learning center provides the most up-to-date information about Corporations and LLC’s covering some of the most commonly asked questions and concerns. Please take a few moments and review the information below in considering which entity type is suitable for your specific business activity.

How to incorporate
Why Incorporate or Form an LLC?
One of the first decisions you will make in setting up your new business is what legal form your business should take.  Incorporating or forming an LLC offers significant benefits.

Significant Benefits to Incorporating or Forming an LLC
  • Personal Asset Protection
    Limited liability
    If you do not want to be personally responsible for the liabilities of the business, then you should create a separate legal entity such as a corporation or an LLC.  Liability is limited to the amount the shareholders invest in the company.  Sole proprietors, however, are personally liable and therefore risk everything they own, including their homes, cars and personal savings and investments.
  • Positioning for Growth

    Ability to raise capital
    A corporation or LLC may borrow money and sell equity to raise capital. 
    Number of ownerS-Corporations and LLC's may have multiple owners.  C-Corporations and LLC's can have an unlimited number.  S-Corporations can have up to 100.  
    Transferability of ownership
    Corporations and LLC's are separate legal entities and, therefore, are more easily sold.  
    Unlimited duration
    Corporations and LLC's continue indefinitely unless they are dissolved. 

  • Credibility as a Business

    • An “Inc.” or “LLC” following a company name, inherently implies a certain level of professionalism.   This can translate into confidence and trust in for others in working with, or for the business.     

So why doesn’t everyone do it?

Sheer oversight, lack of knowledge about the options, intimidation about the process, and common misperceptions such as:

    • “my business is too small”,
    • “it’s too much of a hassle”,
    • “it probably costs more than it’s worth”,
    • “I’ll be double taxed”,
    • “I don’t own enough to worry about personal liability”.

      Instead, businesses should be asking themselves, “Why not do it?” For a business looking to grow and succeed, there is no reason not to incorporate or form an LLC.

 

Costs of Incorporating or Forming an LLC

Initial costs
Yes, it does cost money to incorporate or form an LLC. However, CorpNet™, can assist you in forming and maintaining your legal entity.  Our fees for incorporating start at $49, plus state filing fees.   This is substantially lower than what an attorney might charge for the same service.   CorpNet™ can help you complete the process and save you both time and money with service that is fast, reliable and affordable.

Annual costs
In addition to the initial filing, you may be required to file an annual report along with a fee each year to the State in which you incorporated.  Also, you may need to prepare, or have prepared, a separate tax return for the corporate entity.

A Note about Taxation

“Double Taxation”:  Many small business owners decide not to incorporate because they are concerned about so-called “double taxation.”   This is avoidable in two ways: (1) how you pay yourself and/or (2) which business structure you choose.   For example, if you pay yourself a bonus at the end of the year to avoid showing profits at the corporate level, you will generally not be subjected to two-levels of taxation.  Also, electing S-Corporation status will eliminate the potential for double taxation.

Taxing Savings Potential:  Certain tax benefits may only be available to corporations, including the ability to deduct medical expenses not reimbursed by insurance.  You may also be able to reduce the amount of self-employment taxes owed by allocating income between salary and profit.  All of this is best discussed with your tax accountant who is familiar with the specifics of your business.
CorpNet™ can help:  Many people avoid taking steps because they believe it will be costly to do so.  Not taking those steps, however, may be the costliest decision of all in the long run.  Even in the short run, using a document filing service, such as CorpNet™, to handle the paperwork can keep initial costs to a minimum and save you time, allowing you to focus on the business, not bureaucracy.    Our fees for incorporating start at $49, plus state filing fees.   This is substantially lower than what an attorney might charge for the same service.   Relative to other online document filing services, CorpNet™ stands out.   It is a small, privately owned company whose founders are both attorneys.  They are well supported by an experienced staff of document specialists, who collectively, have filed over one hundred thousand documents in recent years.  CorpNet™ also offers an incorporation 100% satisfaction guarantee.

CorpNet™  can help you complete the process and save you both time and money with service that is fast, reliable and affordable.  And remember, our services are backed by a 100% satisfaction guarantee.  We make everything easy for you so that you can focus on what you do best – running your business!

Learn More About Corporations | Learn More About LLC's

Select Business Type:
Select State:
FREE Start Up Resources
CorpNet™ Incorporation Guide
CorpNet™ LLC Guide
CorpNet™ DBA Guide
CorpNet™ Start Up Checklist
 
CorpNet™ Newsletter News, tools and tips for business owners.