Anatomy of State Filing Fees

Incorporation fees vary widely depending upon in which state you file, but you should only pay the state fee that is requested by the state. For example, one website lists Massachusetts incorporation state filing fee as $390, while a quick check shows that in reality, the state fee for incorporating a business in that state is $275.

It's a good idea if you do plan to hire a firm to handle the bureaucratic red tape, that you either find a reputable company or go online and check out the fee for yourself. Every state lists their fees, so it's an easy thing to verify. Access to the Secretary of State (or Department of State of all 50 states is available at ActiveFilings.com - SOS Access Gateway

If you plan to hire a company to file for you, it might be a good idea to request the state receipt. The last thing you want to do is pay hundreds of dollars more than you need to when starting a new business. Find a reputable company to do your filing and be sure to contact the Better Business Bureau before sending anyone a check.

Having a company incorporate your business is a good idea if you have any qualms about the legal aspects and the paperwork involved in the process. Most companies include various services, from basic services like checking corporation name availability to obtaining the entity's EIN. Again, fees for these services vary widely, so be sure you are comparing apples to apples when researching these businesses.

Why incorporate? Incorporating your business gives you limited liability should you have legal or financial difficulties down the road. It's a sort of insurance policy that will protect your personal wealth if your business suffers. If something does happen to your business, as long as you are incorporated, your business, and not you personally, is liable.

Other reasons to incorporate include the idea that if you are incorporated your business is more legitimate than one that is not. Incorporating gives your business credibility and a sense of permanence that customers look for when doing business.

Also, if you incorporate your business, it can continue after you retire and even if you die. The business can be transferred to your children or sold to another party. Incorporating can also lead to tax savings because corporations are taxed at a lower rate than individuals.

The bottom line is that incorporating your business is probably one of the best business moves you can make to protect both yourself and your business. But like anything, you need to do your homework and be careful who you trust to handle such an important legal matter as incorporating it.

8 Reasons to Register as an LLC

If you’re an existing business of any size, you’re probably required to register with your state’s filing agency. There’s little reason not to register. In most cases, the costs associated with registering are minor.

The toughest part might be figuring out the best business registration option to choose. Registering as a limited liability company or LLC is probably the best option for your business. Here are a few reasons why.

IT’S SIMPLE TO CREATE

In some states, forming an LLC is as simple as going to a website, answering a few simple questions, and paying a filing fee. In other states, the process isn’t quite as easy but if you need to hire a business registration company to help, don’t expect to get a large bill. Some companies will help you register your business for less than $50.00

IT LIMITS YOUR LIABILITY

As the name implies, when you register as an LLC, you are no longer personally liable for adverse events that take place in your company. If your company is sued or files for bankruptcy, the creditors cannot try to collect your personal assets.

While this is an advantage, there are plenty of exceptions. If your lender writes a clause into a contract or other situations exist, you could be liable but as long as you run your LLC correctly, your personal assets are safe.

PASS-THROUGH TAXATION

Your company will likely not pay taxes on its income. The tax is “passed through” to you. Other business entities are required to pay taxes at the business level. As the owner, you would pay business taxes and personal income taxes once you paid yourself. An LLC avoids double taxation.

LESS PAPERWORK

LLCs require very little state-imposed paperwork. Often, business owners pay an annual fee, update their contact information, and answer a few questions. Of course, each state varies but what is consistent is that the paperwork for an LLC is much less than an S or C corporation.

SIMPLE MANAGEMENT STRUCTURE

Does it seem a little silly to have a board of directors for your startup? An LLC allows you to choose the management structure you would like. Some other registration types require you to have a board of directors, formalized meetings with minutes, and other formal practices not appropriate for small, one or two-person businesses.

OWNERS CAN BE ANYBODY

S corporations, for example, place restrictions on the amount of owners. With an LLC, there are very few restrictions (even foreign entities can own an LLC). Because states vary in requirements, your state may have stricter requirements than some.

SOMETIMES IT’S REQUIRED

Bidding on government contracts? It’s likely that you have to be a registered business in order to land the contract. Other companies may require it as well. You don’t have to be an LLC but you do have to be registered.

MORE CREDIBILITY

With unemployment still substantial, many people who are out of work are forming businesses. This has served to diminish the notoriety of being a business owner. Forming an LLC separates you from the people who aren’t committed enough to invest the time and money into being recognized by their state. A business that is registered has perceived professionalism, ethics, and longevity.

Forming an LLC isn’t right for every business. Go to our website for more information about how to form an LLC.