(Day 2) Ink the INC

Reading time: 4 – 6 minutes

There are two things you need to decide when forming your corporation. 1) Are you just going to operate in your state 2) Are you trying to build a empire? The reason for these two questions will determine where you incorporate. Some states are business friendly and if you are thinking about starting Coca-Cola it would be wise to incorporate there. If you are only going to make Local Joe’s Tavern in the 3 cities you live near then incorporate in your state.

Process to Incorporate Your Business

1. Go online and pay for a company to set it up for you! http://www.incplan.net/ the people there are pretty nice and hand holding so it’s great for beginners
2. Think of a corporation name that’s unique but not weird. Don’t use Curt’s Booty Tavern Inc when you can use CBT Inc. Corporations mean business so get your dumbass names out of it.
3. Every state has different filing fees so expect to pay different prices.
4. Order the package that includes the minutes and bylaws. Since you are a beginner it’s best you pay for this now instead of forgetting about it later.
5. Determine if you want it to be a S or C corporation.  (I will explain S and C corporations tomorrow)
6. DON”T order the Tax ID through them as you already know how to do it (Remember). Don’t order the S corporation filing as I’ll show you how to do it tomorrow.

Now there is a step by step way to do it on your own but that’s not necessary and you might as well pay someone else to do it. You do not need lawyers to set up your corporation and if someone tells you that they are a damn lie. It’s filing paperwork just like all the other business entities and they have places that do it already.

Delaware & Why?

Most of your big companies incorporate in Delaware. Delaware has the best business laws on the books. Delaware is a pro-business state and that means when you get sued the courts will most likely be on your side. Delaware is where the big boys play and in time you’ll hear other people tell you about Nevada and other states but Delaware is where the courts are in your favor. So keep that in mind if you are building a empire.

Drawbacks of Incorporating in Delaware

• Since you are a Delaware Corporation you have to pay to play in another State. So if you want to do business in Iowa you’ll have to file a second paper and fee called A Foreign Corporation License. In other words to sell stuff in Iowa you need to be recognized in Iowa. This fee ranges in price considering the state.  See what you’re doing is telling the State of Iowa if a Iowan sues me then the laws of Delaware govern. This is important because Iowa may be a pro-consumer state.
• Being in Delaware means you have to pay for a company to be your representative aka contact person if things ever hit the fan. The company who help set up your corporation can become the contact person for a small fee.
• Delaware has a small like 85 buck annual fee.

Benefits of Incorporating in your Home State.

• Since you live there  you don’t have to pay for a representative to receive notices.
• There isn’t a foreign corporation fee as you are not a foreigner in your own state.
• Probably best if you’re thinking Small

Drawbacks of Incorporating in your Home State

• Your state laws might not be Pro-corporation and when you get sued you’ll be a loser
• When your company expands you’ll still have to pay a foreign corporation fee if you move into the next state to sell your products.

So really it comes down to how big you think your company can be? If you are a small business then it doesn’t matter because being local is alright. If you plan on selling Energy Drinks all across the country then you might want to think about becoming a Delaware Corporation.

Extra: If you are starting a online company if you don’t have any physical contact with another state you don’t have to pay taxes or fees. Only when you decide to physically set up shop in that other state do you need to pay a foreign corporation fee.

Extra Extra: Oh yeah don’t be surprised when you receive all kinds of crazy mail from credit cards to Staples. Once you file your paperwork the corporation becomes public and they will send you every magazine you can think of.

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