Incorporate Your Internet Business in 4 Steps
One of the biggest secrets to success in business is utilizing the power of a corporation. Simply put, a corporation is a separate body without a soul that assumes all risks and liabilities of a traditional business. The many advantages of a corporation include:
- Maximize protection of your personal assets
- Pay corporate taxes after you earn profits and pay business expenses
- Protect trademarks and copyrights under 1 brandable entity
- Utilize business cash management accounts and gain access to extra financing
- Increase brand awareness and customer trust
Corporations carry many more benefits, but these are the important ones worth highlighting. Feel free to list additional benefits in the comments.
Types of Corporations
There are tons of different legal bodies out there for online entrepreneurs to choose from. The most popular choices are:
- LLC – Combines the tax efficiency of a partnership with the personal liability protection of a corporation
- S-Corporation – Works like a small business corporation where owners can avoid double taxation (when you pay corporate taxes, then taxes of a shareholder dividend)
- C-Corporation – Works like a traditional Corporation where owner receives maximum personal liability protection.
So what does it take to incorporate your online business? There are 4 basic steps in the process.
- Develop a Brandable Corporate Name – The name of your corporation will become your brand; You will use your corporate name for all business contacts, deals, agreements, partnerships, etc. Choosing the perfect name is more of a personal preference in my opinion. However, I’ve seen people use their full name as their corporation, or simply come up with a phrase or word to distinguish their brand. The choice is yours.
- Contact your Attorney to Draft the Articles of Incorporation – If you don’t have an attorney already, then please find one soon! Your attorney should draft up and create your Articles of Incorporation, so you may file them with your local state department.
- Approve the Articles with you and your business partners’ signatures - Basically, the articles state what your business goes by, where it is located, and who owns the corporate stock, plus a few more details. You will have to sign your name in a few places to verify the authenticity of the documents as well as receive an official corporate seal to finalize everything.
- File the Documents and Pay your Attorney and State Fees – Of course, incorporating your business has its costs. I spent about $1,000 to get everything done, however you may find it cheaper depending on your attorney, respective state fees, etc. Incorporating online is much cheaper than hiring an attorney, but I value the privilege of talking to a human being when handling such matters. Any errors in the filing process could cost you big time, so do everything right the first time around.
Incorporating your business is really simple. Regardless of how much you earn or plan to earn, incorporating your business will protect you and your business partners in case of a legal/financial emergency. We live in a litigious society, so you have to plan and play by the rules.
Want to Incorporate Online? Try These Websites
If you wish to incorporate online, try the following websites to protect your personal assets:
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