The first thing you need to do is incorporate your business. Please see the following FAQs on incorporating your business:
There are several reasons to incorporate a business. The most notable reasons are:
- Reduce personal liability – The owner of a corporation cannot be held personally responsible for the debts of the company. The owner’s personal assets are shielded from liability.
- Tax Advantages – The income of an S corp is not taxed separately and an LLC has a reduced self employed tax. There are also greater deductions available to corporations vs. individuals.
- Credibility – A corporation communicates structure and credibility. Many individuals and businesses look for a corporation to do business with rather then an individual.
- Transfer of ownership – A corporation is transferable therefore can continue if you would like to pass it on or if you pass away.
An S corp and LLC differ in a few ways. An S corp is a corporation and therefore must file a seperate tax return, whereas an LLC does not need to file a seperate return. An S corp is also limited to 100 shareholders and they must be US citizens or residents, an LLC does not have this limitation.
In most cases, an LLC is more expensive to setup and all profit is subject to both income and self-employment tax an S corp is not subject to the self-employed tax. While an S corp’s profit is not subject to self employment taxes, shareholders who do the work must have payroll through the corporation. An LLC does not have stocks therefore it is governed by ownership agreements, this allows for income to be distributed as they see fit. For a more detailed explanation click here.
This depends on the business structure you are building. Most individuals will either setup an S corp or LLC. A basic business startup is typically done as an S corporation. If you are in need of investors or not a US citizen/resident then you will need to setup an LLC. For a more detailed explanation of entity types click here.
The cost varies by state. For a Florida corporation the cost is $100 plus the state filing fees, for an S corp the filing fee is $87.50 and LLC filing fee is $160. So your total cost to incorporate a Florida S corporation is $187.50 and an LLC is $260. For all other states the charge is $125 plus the state filing fees for both S corps and LLCs.
Provided there are no issues with the information provided the incorporation process will take 24 business hours.
For an S corp:
Articles of Incorporation
Federal EIN number
Small Business Setup with the Federal Government (2553 Filing)
For an LLC:
Articles of Organization
Federal EIN number
Once incorporated you will need to make sure you keep clean records. To assist with this you should develop a bookkeeping system. If you have setup an S corporation, once you have earned $3000 of income, you will need to setup a payroll . All of these items we can assist you with, feel free to contact us for more information.
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