02 Jan Incorporating Your Small Business
Have you been wondering if you should incorporate your business? Did your friend tell you that you should? Well if you own a business and think maybe it is time to incorporate here are a few tips:
- Incorporate only if it makes sense and allows for some financial gain and protection of assets. Incorporating costs money, requires additional tax preparation, annual minutes, additional state taxes and filing fees, annual reports and requires a higher standard of record keeping.
- Talk with your financial adviser and tax accountant. They have the best view to your financial picture. They can advise if there is any advantage to becoming incorporated and what the best corporate structure for your business might be.
- Don’t use one of the online websites like Legal Zoom if you are taking this seriously. A website can’t be a substitution for a thinking, advising, logical person. The fees year after year can also be extensive. Removing them as your proxy in some states can be expensive and difficult.
- Understand all the steps before you get started. I see so many corporations that were half set up it would make you crazy. Getting accepted by the IRS and filing articles of incorporation with your secretary of state IS NOT WHERE IT ENDS. Often times lawyers stop there but you do have more to do. Be prepare to transfer assets (and pay sales tax to do so), set up new insurance policies, set up new payroll, re-enroll for trustee taxes, start a new bookkeeping file, alert your vendors and customers, set up new bank accounts, notify any licencing boards and professional groups to which you belong.
- Get good help. A good lawyer, accountant and bookkeeper will go a long way to making this go smoothly.
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