Three Things to Consider when Forming a Corporation or LLC

This article was written with the focus of helping potential small-business owners with the task of incorporating their business (Corporation or LLC). Contact Chris Einkauf or John L. Williams, Esq. at Agents and Corporations, Inc. with any questions, concerns or comments.

1) Pick the "best" formation type
First, and most importantly, a small-business owner must pick the optimal formation type (corporation versus LLC versus partnership, etc.) for their given industry and business. Some business owners decide to go with the traditional-style business, the "corporation". They decide on this formation type due to their familiarity with it and some of the tax benefits relating corporations with big business. Most SMALL business owners, however, go with the more modern (and usually more beneficial) business type, the "LLC". L.L.C. is short for "Limited Liability Company, and shares the corporation’s benefit of limited liability in that the owners are not held liable for the business debts, losses and expenses. The L.L.C. has many benefits that are not shared with the corporation, though, with most of these benefits deriving from the nature of small business demands. Due to the short length of this article, it would be very hard to list all of these small business benefits, but it should be known that most small business owners would receive more benefits from an L.L.C. business type than any other type of entity. (If you seek more information about this, visit LLC Advantages and Benefits).

2) Pick the "best" state
The next step, and another very important one at that, is to decide the state in which you want to first incorporate or form your L.L.C. Each of the 50 states have their own set of laws which govern exactly how the businesses in that state can and should conduct business affairs. For example, each state varies on the extent to which businesses are taxed on the corporate level and on the amount of information that must be disclosed to the public and to the government. No matter where the company does business, its internal business affairs are governed only by their home state. As a result of this, there are a few states in which it is simply more advantageous to incorporate or form an LLC. The two very best states, in this author’s and others' opinions, are Delaware (the best state to start your business in) and Florida (a lower cost alternative to many other states). Another thing to keep in mind about Delaware and Florida is that you need not have an office in either of those states to incorporate or form an L.L.C., provided that you have a registered agent in Delaware or Florida that will accept documents on your behalf.

3) Pick the "best" package
Lastly you must pick the best package for your company. The simple way to resolve this step is... (always) pick the complete package. Some incorporation companies will offer you an incorporation package which includes only a few of the essential elements of incorporating a business. The rest of the elements, all of which are extremely important and will cost you a lot of needed funds later on, are up to you to acquire. Skip this problem and go with the right package right off the bat – the one that gives you all of these elements right away. If you feel it is too expensive, just realize it is a small price to pay to avoid a lawsuit or legal judgment in the future.

Chris Einkauf works with Agents and Corporations, Inc. in Wilmington, Delaware. Agents and Corporations, Inc. has been incorporating corporations and forming LLCs since 1974. Their website is http://www.incnow.com.