Incorporating your home business is a smart move if you're concerned about overpaying on self employment taxes and about reducing risk to your personal assets.
The process of incorporating a home business has been radically streamlined thanks to online document service providers who only need you to complete a quick online questionnaire, and if needed, a quick phone call to a customer service agent who can help you along with the process.
Determine if you need to file for an S-Corp or a C-Corp. Both are similar, but have separate distinctions in formalities and required paperwork to be filed each year. See Resources section for a side-by-side comparison.
Determine how you would like to file your incorporation documents. You can file your paperwork the "old fashioned way" by using a Do-It-Yourself approach (least expensive), by hiring an attorney to complete the documents for you (most expensive), or by paying a small fee to an online document service provider to file your documents for you.
The DIY approach will vary from state to state since each state government has different rules. The requirements, regulations and appropriate contact information for each of the 50 states is included in the Resources section.
For the everyday person, picking an online document service provider could be the best way to go because of competitive pricing, a trained customer service staff to provide assistance and quick turnaround time.
Select an online documentation service provider that fits your needs. Companies like LegalZoom.com and MyCorporation.com provide the required incorporation paperwork necessary to register your new corporation. They have streamlined the process so it only takes a few minutes to complete. They also provide customer service agents to assist you if questions arise.
Complete the online questionnaire. At this stage, you will enter your personal information, as well as answer the introductory questions the document provider requires to file your incorporation paperwork on your behalf. This can be somewhat confusing since you're required to think so far in the future, so place a call to customer service if you become hesitant about your answers.
Pay your document preparation fees with a credit card.
Wait for your documents to be filed and registered with the appropriate state agencies. This is done on your behalf by the document service provider and generally takes three to five weeks to complete. Rush orders can be requested but the price goes up substantially.
Sign your documentation once it arrives, and return it to the disclosed locations. You may be required to have your signature on file with the regulators, so sign and mail the documents as directed.
There are dozens of online document providers, but stick to those with a solid reputation and customer service department that can talk you through the questionnaire process.
Many of these companies offer competitive pricing, so be sure to check around with multiple companies to find the best deal.
Beware of anyone offering a "to good to be true" offer. Occasionally, one of the major companies will offer to file your paperwork for free, but there could be hidden charges.
- Johan Larsson @ Flickr