Incorporating your startup can prove beneficial. You’ll get tax benefits and additional legal protections. Plus, incorporating lends credibility to your business, making it easy to attract new investors. But there’s a problem. Incorporation can carry high costs. But don’t allow this to scare you away. Let’s look at some ingenious ways to incorporate for cheap.
Handle The Process Yourself
The cheapest way to incorporate is to take charge of the process yourself. Simply fill out the appropriate incorporation documents. Most of the time, this can all be done electronically. Generally, these forms are fairly straightforward. But you might still want to have your attorney double-check them before you submit.
However, this approach isn’t without risk. A minor mistake on these forms can prove costly. You could even face legal issues. That’s why many people opt to pay a little extra to have someone else navigate these complex documents for them. This service is especially valuable when you are pursuing a more complex incorporation scenario, as these forms can quickly get complicated.
Choose Where To Incorporate Carefully
You don’t need to incorporate your business in your home state. You can register in any part of the country. This is a big decision as each state has different taxes, fees, and legal protections. But you’ll need to be careful. Some states offer the cheapest incorporation fees to try to attract businesses. Once you are registered, they will charge you higher taxes.
Because of this, it’s a good idea to do plenty of research before making this consequential decision. Over the long term, this could end up saving you thousands of dollars. If you make a mistake and pick the wrong state, you can move your business to a different jurisdiction. But this is a tricky process. You’d either need to dissolve the old corporation or merge it into the new state. This can take a long time and will often be a costly process.
Get A Suitable Business Address
One of the things that startup owners struggle with is finding a suitable business address to list on the incorporation documents. Some states don’t allow you to list a residential address as a business address. The good news is that you don’t need to go through the expense of renting out an office space. You might save some money by sending official documents through a virtual office. Or you could rent a Post Office box and use this as your company’s address.
Produce Documents Yourself
Another way to incorporate for cheap is to produce the key documents yourself. One of the easiest ways of doing this is generating your own Employer Identification Number (EIN).
If you want to take things one step further, you can make yourself the registered agent. This is the person who the state contacts when a lawsuit is filed against the company. Because of the paperwork associated with this position, it’s common to use a third-party registered agent. But, if you are willing to do the work yourself, you can cut down on costs. The only condition is that you need to live in the state where the business is incorporated.
Picking The Right Type Of Incorporation
When you incorporate, you need to decide what type of corporation you want to form. This can be a challenge, as each option has pros and cons. For example, if you file an S corporation, you will need to hold annual meetings. Generally, starting an LLC will offer the cheapest way to incorporate.
This decision doesn’t just affect the type of paperwork you’ll need to file, it also affects your tax obligations. Because of this, it might be a good idea to bring in an expert to guide you through your choices. This will let you choose the right corporation model for your business.
Using A Cheap Incorporation Service
Incorporating a business requires a lot of paperwork. Balancing this workload with running a startup is tough. Because of this, many people opt to use an incorporation service. They will help you through the process.
The good news is that this doesn’t need to be a huge expense. Many companies only charge a few hundred dollars for this service. But it’s best to do a little research before picking an incorporation service. Make sure to read the customer reviews to find a team with a good reputation. It’s also a good idea to look at a quote, to make sure that you can afford to use their services.
Conclusion
For a small start-up, the process involved with incorporation can seem like a challenge. Many people assume that the costs will be too high. But this doesn’t have to be the case. There are plenty of tips that you can use to incorporate for cheap. This gives you more money to use to grow your business.
