Incorporating Inexpensively In Florida
Incorporating in any state is often an expensive process
. But if you're a Florida entrepreneur, thankfully, you've got at least four gambits you can use for reducing your incorporation costs:
Cost Saving Idea #1: Consider NOT Incorporating
A first, crazy idea, but one worth gnawing on at least a little bit: Are you sure incorporation delivers benefits commensurate with the costs and headaches?
Make no mistake, incorporation will often reduce your business risks at least a bit. And incorporation also often reduces the income tax and payroll taxes that you'll pay on the venture's profits. But incorporation also costs money. And here you're not just talking about the few hundred bucks (maybe) of setup costs. There's the requirement for an annual tax return, possibly the need to process payroll, and the extra legal red-tape associated with things like stockholders' meetings, boards of directors, and corporate minutes.
In the case of a very small, one person business--perhaps especially a part-time or sideline business--you may just want to be more careful about who you do business with and how you do business. Extra caution and perhaps a bit of extra liability insurance may be a better choice than incorporating for some entrepreneurs just starting out.
Note: You can usually later incorporate a sole proprietorship or partnership for modest cost and with no adverse tax consequences.
Cost Saving Idea #2: Consider the Limited Liability Company Alternative
Another option to consider if you're mulling over the idea of incorporation? Perhaps you shouldn't incorporate. Perhaps you should instead form a limited liability company.
Yes, Florida charges you more money initially to set up an LLC. Filing the articles of incorporation for a Florida corporation costs $35, while filing the articles of organization for a Florida limited liability company costs $100 plus $25 for the registered agent fee. But even though the initial setup costs are more for an LLC, you'll often pay much more to file corporation tax returns than you pay to file LLC tax returns. The reason for this weirdness is that, with an LLC, you won't have to file a separate federal or state corporation tax return. Instead, you'll be able to include your business's income and deductions inside your regular 1040 tax return.
Simpler tax return preparation saves money. Corporation tax returns often cost hundreds of dollars a year (or more). And corporation status often triggers the need to set up a formal payroll processing system and regularly prepare payroll tax returns.
Note: A Florida limited liability company should offer you legal protection that's just as good as the protection offered by a Florida corporation. The state legislature designed LLCs this way.
Cost Saving Idea #3: Fill-in the Incorporation Forms Yourself
Another money-saver: Take a look at the pre-printed Florida incorporation forms (available at the Florida Secretary of State's sunbiz dot org web site) and see if you'd feel comfortable preparing the simple articles of incorporation form yourself.
With the state's pre-printed form, you just fill in the blanks. You plug the corporation name you want to use into the "Name" box. And you plug the corporation's address into the "Principal Office" box.
If you can fill out the very simple, standard Florida form, you'll have saved yourself several hundred dollars of setup costs--at least.
Tip: Your new corporation also needs corporate by-laws and these by-laws are not available from the state's sunbiz dot org web site. You can however find websites that sell simple low-cost sample corporate by-laws for use with a Florida corporation.
Cost Saving Idea #4: Be Your Own Agent
A final cost saving idea. Rather than pay some third party to collect your mail and accept legal notices, you can agree to be your own registered agent. The job of being a registered agent is one of the easiest jobs in the world. There's no reason to pay someone $100 or $200 a year (or more) for the work.
Note: You must reside in Florida and be able to provide a street address in order to act as your own registered agent.
by: Stephen Nelson
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