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Jan24
To Inc or Not To Inc?

How you will set up the structure of your business is a very important consideration.

Will you operate as a sole proprietor, a partnership, an LLC, or a corporation?  S-Corp or C-Corp?  Each choice has it's own advantages and disadvantages regarding taxes and the type of records you will have to keep, among other things.

If you haven't done so already, now is the time to talk to an accountant or a lawyer.  Most will answer a few questions over the phone for you at no charge, which may at least get you started in the direction that you want to take.

Another consideration you might keep in mind is timing.  Since I began this process in October, a friend of mine told me to wait until January to incorporate so that I wouldn't have to pay another filing fee in two months.  (They're based on the calendar year)  I believe this was the worst piece of advice I could have gotten.  Until your company is "official", there are so many things you can't do, such as opening a bank account.

I also couldn't make arrangments for anything I needed that would have included my company name, such as business cards or a website, because I didn't know if the name I had chosen would still be available in two months.

So, I basically sat stagnant for all of that time, and then when January arrived I had to rush around to accomplish everything that needed to be done after incorporating and before I could make my first trip to purchase inventory.  If I had it to do over, I'd have spent the extra $80, creating my corporation in October and renewing it in January.

If you do decide to incorporate or form an LLC, and have confidence in your abilities to handle all of the filing yourself, the necessary forms can be downloaded at Nolo.com.

If you want to use an online service, they are very plentiful.  I chose to use Amerilawyer.  I had planned to file the paperwork on my own, but it just became too overwhelming for me.  I guess law is not my strong point.  This way, all I had to do was answer a few simple questions, and they did everything else, including the by-laws and the annual meeting minutes.  The cost to set up an S-Corp was $176.95.  Not bad, considering that the filing fees alone in Florida are $80 and were included.  I paid an extra $75 for "indemnification", basically stating that the corporation and not the officers themselves, are responsible for any decisions made by the officers of the corporation (me), should any financial liability arise from those decisions.  And I joined what they call their 'General Counsel Club', which gives me free unlimited telephone consultations for the next 13 months.  Total cost $353.40.  Ouch.

Amerilawyer, as most of the others do, also offers services for the truly lazy entrpreneur, such as obtaining a Tax ID and a Sales Tax number for you.  It is quick and free to get both of these, and Amerilawyer charges $35 for each, so I opted to do these on my own.  I guess that's where they make their money, on all the fringe services.

The Tax ID number can be obtained in 60 seconds on the IRS website.  The Sales Tax ID (for Florida) is free from the Florida Department of Revenue website.  I'm sure that most states have a similar set-up.

It definitely pays to do your homework.  Check the price and ease of filing any paperwork before you pay someone else to do it for you.  But don't get in over your head.  This is one area where you want everything to be done in absolutely the correct way.

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