How To Incorporate

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After you know what you're going to do for a business, there are three important steps to accomplish when creating a small business.

1. decide on a business structure or organization
2. open up a business bank account
3. determine if an EIN number(Federal Tax ID) is necessary

After completing these steps, the groundwork for your business is set and you're on your way to becoming the next successful business person.

Choosing a Business Structure - Once you decide to go into business, you'll have to choose a business structure to see what kind of paperwork you'll have to fill out to make your business a legal entity. There's a lot of variety among the structures in regards to their tax implications, fees and personal liability. A sole proprietorship or partnership might be all you need to quickly and inexpensively start a business, but they leave you personally vulnerable. On the other hand, a corporation could provide you with less personal risk and liability, but cost more time and money than you're willing to invest. Spend some time understanding the different types of structures, since they all have their pros and cons. To learn more about the different business structures, check out entrepreneur.com, and the Small Business Administration.

After choosing a structure, you may need to decide where you'll want to incorporate. A lot of companies do not incorporate in the state in which the founders reside. Different states have different laws that may prove beneficial or detrimental, depending on what you're hoping to accomplish. Three of the most popular states to incorporate in are Delaware, Nevada, and Florida. We can see you all starting to search your way to an informed decision, and what you'll find is a lot of businesses selling online incorporation services. Nothing is easier than to incorporate online.Online incorporating is actually an easy process and can even be done on the web or on the phone with some firms. Incorporating online cost between $200-$400 through a law firm. You'll get all the paperwork set up for you with standard incorporation agreements, minutes, and anything else you need to become an official entity. Should you decide to incorporate, we recommend sitting down with a lawyer or accountant with your individual objectives and circumstances before making a decision. The cost may be nominal, but does provides some peace of mind.

Business Bank Account - Once the company is official, contact a bank and create an account dedicated to your business. While you can use a personal bank account for some forms of business, it just isn't a good idea. A business bank account allows you to separate business and personal finances and provide a good level of transparency should you ever be audited. Expect to pay some minor fees.
Setting up a business bank account will be free to about $50.

Employer Identification Number - Once a business structure is selected, your company might need an employer identification number or EIN. An EIN is a unique number the IRS assigns to your company for tax purposes. This is the business equivalent of a social security number for your business. The IRS provides information for determining if you need an EIN, applying for an EIN, and a detailed PDF on EIN's. Most incorporation services will fill out the appropriate form for you to mail off to the IRS.