I want to create a new entity for internet services consulting. What is the cheapest way to incorporate this entity? Does it have to be done in the state in which I live?
You're going to need to consult your attorney. Depending upon what sort of business you're starting up, you'll need the help of a legal team to make it work.
You don't need to incorporate in the state you live, but depending on the state, you may have to pay a minimum tax do business regardless of where you incorporate. For instance, California has an $800 minimum tax for corporations that do business in the state. Wyoming and Nevada are a couple of favorites for incorporating for liability reasons and no state taxes (although many people automatically associate Nevada with a scam operation). There are a lot of places online that can help you incorporate, but you really need to talk to a CPA in your state before deciding what is best for you. You're going to have extra work and expenses with a corporation.
I create my own LLCs all the time. You can do it yourself but you better know what you are doing or you can get yourself in trouble. I highly recomend the self help legal books by NOLO Press. They have stuff on starting a new business or creating and LLC. I am not neccessarily recomending that you do it yourself but you will be better prepared to work with an attorney if you understnad the issues going in. There are both legal and tax issues to consider when choosing the proper business structure. The problem is your attorney many not understand the tax implications and your accountant may not understand the legal implications. This is why I suggest studying up to learn at least the basics yourself and not simply rely on a professional. In most states you need to register a "foreign" (meaning out of state) company. So any advantages of owning a Nevada corp for example simply go away. Good luck, Ned Carey
That not true. While there may not be tax advantages to incorporating in another state, many states require 3 people for a corporation, and 3 officers. One man corporations in some states have been ruled void - offering no corporate veil liability protection. Nevada and Wyoming are two states where piercing the corporate veil in cases not involving fraud are very hard if not virtually impossible.
hibernate, Let me see if I can answer your questions. You asked what the "cheapest" way is to set up your company. The "cheapest" way to be a company is simply to be a sole proprietorship, which costs you nothing (except your DBA with the state or the county depending on where you live) but doesn't give you any liability shield. Next cheapest is generally going to be an LLC in the state where you live. You can go to your department of state website and all the forms are there. I understand that you want to do this cheaply, but I would strongly recommend that you seek the assistance of an attorney if you want to file as an LLC. The entire purpose of forming an LLC is to provide yourself a liability shield. If you set up (or maintain) your company incorrectly, you could lose that shield. If you want more information on maintaining your liability shield, feel free to visit my blog where I've done a blog post on the topic. If you have other questions, let me know. Deena _______________________________________________________________________________ Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to create an attorney-client relationship in any way.
Can I start off as a sole proprietoreship and then if the business becomes viable and profitable incorporate as an LLC?
Yes you can. Probably the only reason you would want to incorporate or form a LLC for a new business is the liability protection of your personal assets. If liability isn't a concern, you're probably better off starting off as a sole-proprietorship.
Absolutely. I agree, as long as you're not in a high risk business and you're not worried about getting sued, you should be fine as a sole proprietorship for now... Deena _______________________________________________________ Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to create an attorney-client relationship in any way.
The cheapest way is to do it yourself. Google your state's (or your desired incorporation state's) Secretary of State website and you should find the forms and filing fees there.
You should incorporate your business in Delaware. Did you know that 60% of Fortune 500 companies incorporate in Delaware to save money and gain tax benefits? Delaware offers a lot of great benefits for incorporation.