Low Cost Incorporation: Everything You Need to Know
A low-cost incorporation is possible for small business owners, as they don't need to necessarily pay a high amount to incorporate a company.3 min read
2. The Registered Agent Syndrome
Getting Your Business Incorporated
An incorporation is another word for a business structure, similar to a partnership or sole proprietorship. An LLC, or limited liability company, is one type of incorporation that doesn't require issuing stock or hiring a board of directors. In some states, all that's needed to register the company is filling out paperwork. Incorporation statements are often the articles of organization, but the name is different depending on the state. The required forms are often available online and submitted through the state's website or downloaded to send in.
The forms are typically easy to fill out and not complicated for the average person to complete. Some websites and companies will even put all the paperwork together so there's no reason to track down each application. However, there will be a fee that varies from this service. Doing it yourself is free, and the only cost you need to pay is the incorporation fees to the government agencies. The fees you pay to these agencies vary from state to state and depend on the incorporation type.
Several different ways are available to incorporate, including the following:
- Using an attorney that has knowledge and experience with incorporating businesses.
- Doing it on your own to save money.
- Using a service online to help put the papers together.
Using an attorney to help you incorporate is helpful, as it's faster and will ensure you have all the required paperwork. However, their fees are often high and will be more expensive than using a service company or doing it yourself. Some people prefer paying more money to have a sound peace of mind and cover everything they need to incorporate. They can also provide additional services including reviewing purchase agreements and leases, preparing employment contracts, and succession planning in case an owner dies.
Using an online service to help with the processing is also helpful and saves you money compared to using an attorney. They can help you form an LLC, but keep in mind they can't give any legal advice. They won't prepare any corporate minutes and won't review or change their form bylaws to get specific to your company's needs. They will give you business advice that you'll need when you're setting up the new company. It's important to look at all their services and prices and see if it makes sense financially for your business.
Take in mind the cost to ship documents back and forth through secure companies like FedEx and that shipping and handling will be an extra fee. You may also need to pay a fee each month to have an office that's registered for mail forwarding. Add all these costs up to see how much it'll be in total and if that's worth it for you.
The Registered Agent Syndrome
Many low-cost corporations will emphasize how important having a registered agent is. All state corporate laws make it mandatory to have an actual person who lives in the state of incorporation. They'll be the contact for anyone the company needs to talk to on the corporation's behalf. The registered agent will get any official mailings from the state and mailed to the corporation. These are often limited to the yearly report statement, filed each year. The agent will also be the person who gets served with service of process in case the corporation is part of a lawsuit. Another option is to have an incorporator be your registered agent, which costs anywhere from $50 to $150 every year. They can also suggest that you become your own registered agent for no charge or can set up an address for you that mail forwards to each month for a fee.
If you need help with a low-cost incorporation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.