THE COST OF INCORPORATING A SMALL BUSINESS

2007-06-20 15:49:53

( Business )



Why Incorporate?

Self-protection as well as protection of their shareholders from liability is the main reason why incorporating a small business is resorted to by entrepreneurs. In this manner, personal assets are safeguarded from any lawsuit.

HOW MUCH DOES IT COST TO INCORPORATE?

However, the amount of incorporating a small business should be considered before proceeding to the process of incorporation. Here’s a glimpse of what you will pay and the changes that come with varying conditions.

Attorney’s fees. Incorporating a small business is possible without a lawyer but not advisable. Without an experienced lawyer, you might mess up the process and your corporation might fold when scrutinized under the law.

For assisting in the incorporation of your firm, certain charges will have to be paid for as payment for accomplishment of required paper works, and setting-up the mandated initial shareholder’s meeting.

A higher fee will be charged if your firm will be run by more than one incorporator. Additional fees will be paid if your lawyer prepares a shareholder’s agreement.

More designated shareholders means higher attorney’s fees. Raising funds by selling shares to a group of people will also have corresponding charges. This is because your lawyer will have to work out matters concerning complexities of securities law.

A lot of money can be saved if you will have the initiative to accomplish important documents like certificates of incorporation, charters or articles of incorporation. These forms may be found in the office of your Secretary of State. When you are done with forms, your lawyer may review them.

The problem is you may find it difficult to get a lawyer who is willing to do such act. Lawyers would rather prepare the documents themselves.

An online incorporation service is another option that you may consider in incorporating a small business. Queries can be answered by many of these internet marketing sites for small business, which can assist your firm incorporate through the Internet. After completing the forms online, these sites ask for your information, place them in legal forms and file them with your Secretary of State on your behalf. Small business payroll services are also available to help you out in the process.

Filing fees. Aside from the attorney’s fees, you are also required to pay administrative and filing fees. The charges will vary depending on the state where you are incorporating. Other government fees would also have to be paid.

First-year franchise tax payment. These taxes are required by every state for the right to conduct business in the state as a corporation.


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