Incorporation: The Web Can Help

Today's precarious economic conditions have prompted more and more people to start their own small businesses. For both new and existing small businesses, setting up the business as a corporation or an LLC (limited liability company) can be a key step toward success, but doing it the right way is equally important...

Fortunately, the Web has numerous resources to help you through what may be an urgent process. I learned on a Wednesday night that I needed to be incorporated to get paid for a new job, and by Monday, thanks to the right Web site, I was all set up, papers and corporate embosser in hand. 

  Every small business is unique, so identifying the best way to do business requires more than a little planning. It may be important to involve an accountant or an attorney, but it's also possible that you can complete the whole process in a few Web sessions, as I did. Online incorporation simply involves making a few decisions, filling out some online applications—and paying some fees.
Many Advantages Online
Unless you need the help of an attorney or an accountant, the Web is the best place to do your incorporating. There are several reasons:

• All of the paperwork is electronic. You can even apply for your Federal Tax ID online.
• You can comparison-shop. Many incorporation companies run occasional specials, so even if you're thinking of going with a particular resource, you could stumble on a deal elsewhere that changes your mind.
• Telephone contact with the incorporating company may be limited to business hours, but online you can usually check on the status of your incorporation 24/7.
• You can get information about your individual state's incorporation requirements on its individual site.
• You can learn about the differences between LLCs and other kinds of corporations, and understand their advantages and disadvantages before you make a decision.

Going for It
There are two types of corporations: the C corporation and the S corporation (named for the subchapters of Internal Revenue Code under which they're taxed). For most small businesses, the C corporation option isn't in play, given its complexities and required reports and other filings, along with corporate taxes.

The simpler S corporation is much more suitable for the small business. For sole proprietors and small partnerships, an LLC is often a good fit.
Once you've made the decision to form your S corporation or LLC, you can make it happen pretty quickly, thanks to numerous Web sites that specialize in incorporation. They can usually incorporate you or form an LLC in any state. One caveat: They will try to sell you a lot of additional services that you may or may not want or need, or that you can easily do yourself (like obtaining your Federal Tax ID number).

MyCorporation is a service of Intuit, makers of accounting, personal finance, and tax software. The MyCorporation site is a tremendous place to start—and maybe end—your quest. It provides an enormous amount of information about starting LLCs and corporations.
For example, it helps you decide what kind of incorporation would be best for you via a free online guide, comparison chart, and newsletter. In fact, there's an entire online library that outlines the process.

You'll need to select a name, and MyCorporation will check to see if it's available, if you use its service to file. Other tasks that the site helps with include a Registered Agent Service ($169/year) and getting a Federal Tax ID number (also known as an EIN, or Employer Identification Number). MyCorporation walks you through the whole process, making sure that you've followed all the required steps and filing the paperwork for you after you've completed an application.
At this writing, on top of all of the online assistance it offers, MyCorporation is also one of the most economical resources. In fact, its service (normally $149) is being offered free with an online coupon, and it comes with QuickBooks Simple Start Free Edition, a company Web site for one year, and a copy of corporate resolutions. You'll still be on the hook for state filing fees (they vary), Registered Agent Service, and shipping and handling.

LegalZoom offers business formations in all states for all types of businesses. It offers less guidance than MyCorporation, but it does help you determine which kind of legal entity you should apply for, and it includes an education center with FAQs, a glossary, and a wealth of information about the incorporation process.
LegalZoom will run a name search for you. Service fees start at $149 for an LLC and $139 for a corporation; higher-priced packages include things like rush service, an official company seal, and custom stock certificates. Additional entities covered include nonprofits, limited partnerships, and DBA/business names.

The Company Corporation specializes in Delaware and Nevada incorporations, but files in all states. It accommodates LLCs, nonprofits, S and C corporations, and professional corporations.
The site includes a good amount of information on the topics, and also offers an economical $99 option, which includes expedited completion and filing of the articles of formation, six months of Registered Agent service, company name search and reservation, and unlimited phone support. This is a good deal.

BizFilings will give you a quick quote from a link on the front page, laying out its three levels of service. The no-frills Basic service would cost you as little as $95 (on a current promotion) for LLC filing, name check, and six months of Registered Agent service. If you filed in Delaware, the state fee would be $90, so you'd get it all done for less than $200.
Extras here include Federal Tax ID procurement, overnight shipping, and a business license application package. Some extras are offered free in the most senior service (currently $195 not including state fees). An intermediate service is $175 plus state fees. Extra services may be purchased à la carte.

The Bottom Line for Your Business
I recommend you start by exploring the sites available for incorporation. If your business is simple and you just want an LLC, you should be able to handle it yourself quickly. But if there's any question about which option you should pursue, consult with your accountant and attorney. Then hit the Web to go through the actual incorporation steps.