Incorporating Your Small Business: Three Tips For Saving Startup Costs

Incorporating a small business? Many entrepreneurs ignore costs and instead just trust their attorney and accountant to handle everything

. That's okay maybe... But you should know that you can often save hundreds and maybe thousands of dollars when incorporating a business by employing three cost-saving tips:

Tip #1: Consider the Limited Liability Company Option

Here's a first tip related to incorporating your small business or investment venture: Don't automatically assume you'll go with a traditional corporation. That's one choice. And a corporation is often a good solid choice...

But note that you can also use a limited liability company instead of a small business corporation. A limited liability company should give you just as much liability protection as a regular corporation. (In fact, some lawyers say that limited liability companies provide superior legal protection compared to a corporation because LLC rules are harder to botch.)

And a limited liability company gives you the option of doing simpler tax accounting. A simple-member LLC (also known as a one-owner limited liability company) can choose to report its income and expenses on the owner's regular 1040 income tax return. And a multiple-owner LLC can do a simple partnership tax return instead of the often more complicated corporation tax return.

Tip #2: Consider Taking the Do-it-yourself Incorporation Route

Another cost saving tip related to setting up your corporation (or, just maybe, your limited liability company): At least peek at the articles of incorporation forms or articles of llc organization forms that your lawyer, CPA or document preparation service will use to create the new corporation or LLC.

The incorporation and llc formation forms are pretty darn simple. And maybe even more relevant, the forms are available for free from most state Secretary of State web sites. For example, if you want to setup a corporation in Vermont, Google on a phrase like Vermont Secretary of State. Or if you want to form a limited liability company in Nevada, Google on a phrase like Nevada Secretary of State. Either search will quickly lead you to the appropriate secretary of state's website. And a bit of poking around there will probably let you quickly locate free incorporation and free limited liability company forms.

Tip #3: Be Your Own Registered Agent

A final, quick tip: Your new corporation or limited liability company needs a register agent that people and the government can contact. Sometimes, incorporation services want to provide this service for you. But you often don't need to use a registered agent service. Just save the registered agent fees and be your own agent. (You want people--like customers and prospective customers--to easily be able to find you, right? Why hide behind some paralegal or document preparation firm?)

by: Stephen Nelson

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