|
Incorporating Your Small Business
For the owner of a small business, two key
decisions are whether and how to incorporate.
Even if you are a "one man show,"
incorporating is often worthwhile, and therefore,
many business do file for some form of incorporating.
The chief reason for incorporating is to
limit your personal liability. Incorporating
your business separates its assets and liabilities
from your own, so if your business cannot
repay its debts, creditors normally cannot
seek repayment out of your personal savings.
Similarly, lawsuits stemming from your business
normally cannot go after your personal assets.
But the protection is not bulletproof: grossly
negligent or fraudulent acts, such as reducing
your business's assets by paying yourself
an excessive salary or dividends, may void
some of these protections.
Incorporating is a significant, legal step,
and although many states make it easy to
file for incorporation on your own, you may
find it helpful to rely on an expert. For
them, the process is routine and they can
help you avoid a costly mistake in your filing.
Their fees vary by state and type of incorporation,
and reflect the varying charges assessed
by different states.
Even if you decide to file on
your own, peruse
the websites of companies offering
the service.
You can learn a lot about the
process of
incorporating that can help you
decide if
you need their help with issues
such as:
- Type of incorporating, such as an "S"
corporation or LLC. An LLC (Limited Liability
Company) is a popular form of incorporation
for individuals, who want many of the benefits
of a corporation without the need to file
separately at tax time.
- Choosing the state to incorporate in. If
you live, work, and do business in just one
state, the simplest solution normally is
to incorporate in the same state. If you
have residences, work, or do business in
multiple states, the decision is more complex.
.
- Whether incorporating will let you obtain
certain employee benefits, such as health
insurance.
- The tax and reporting requirements to which
your corporation will be subject .
Finally, if you choose to have a company
file your incorporation for you, shop around.
Fees very widely, and because the filing
process is mostly routine, you can save a
significant amount. |
|
|
