Cheap Incorporation Tips

I get this question from time to time: How can I incorporate cheaply?

Cheap incorporation services abound on and off the Internet. There are several very important things to consider before you form a new corporation or limited liability company. I’ve written elsewhere on this website about both tax and non-tax considerations that can affect your business and financial future, and I suggest you read those articles before you proceed to form any new company. And, I always believe it’s essential to consult your legal and tax professionals before you do anything that can have legal and tax consequences. Certainly, forming a new corporation or LLC falls into that category.

That said, here are some suggestions for forming a corporation inexpensively, or, cheap incorporation.

Compare Services and Prices

If you know me personally or only from my articles here at Incorporation911.com, you know one of my basic axioms: “There’s no substitute for firsthand knowledge.” Certainly, most folks can’t know everything about everything, but when it comes to your company, you ought to know enough to understand its form and mechanics. A good place to start is start with my article on business incorporation basics. I suggest you also subscribe to my free 5-part mini-ecourse What You Must Know Before You Incorporate. Cheap incorporation may not be so cheap if you don’t know something about what you are doing. And, you don’t want to be foolish or fooled by service providers who might oversell or undersell you on their products.

In quotes, search Google for the keyword “cheap incorporation” or “cheap incorporate.” Google will return results that include links to incorporating “mills,” legal service providers (attorneys, paralegals), and articles, reviews and comparisons. As always, caveat emptor - buyer beware. Surfing several of the websites will give you an idea of what the going rate is for forming a basic corporation or LLC using outside service providers. The larger providers include BizFilings, LegalZoom and The Company Corporation.

Prices can vary widely. Some service providers will charge you only for the filing fees paid to the Secretary of State or other corporations division in the state where you create your company. For instance, the the Nevada Secretary of State’s new incorporation filing fee (as of this writing) for the minimum authorized share capital ($75,000 or less) is $75. A cheap incorporation service provider may only charge you that filing fee to form your new Nevada corporation. However, for that basic filing fee, you will likely receive only a certificate of incorporation and a copy of the filed articles of incorporation. The service provider may or may not include their services as the “incorporator” and/or the required Nevada resident agent. That’s why it’s a cheap incorporation alternative.

Also not included is a corporate records book with forms for your organizational meeting minutes, by-laws, stock elections, stock certificates, transfer ledger and corporate seal. Such services and materials are usually available for an additional charge. A cheap incorporation service provider many times is looking to make their profit from you on future annual charges for their resident agent service, and the sale subsequent corporate supplies such as the “corporate kit,” legal services, how-to books, instructional CDs and videos, and their elaborate “office” packages.

D-I-Y Cheap Incorporation

If you’re informed and up to the task, you may be able to do-it-yourself. Cheap incorporation, that is. There’s useful information on this website that may help you. Please see my articles on how to self incorporate , and more about self incorporation.

New company filings are usually made with the Secretary of State or other state corporations division. Many times their office will provide blank forms for filing corporations, limited liability companies, limited partnerships, business trusts, and other hybrid forms of business entities. You may be able to get the information by telephone or mail from them, but now you can also get it from most states online. I provide quicklinks to each state’s online commercial recording division (where available) here.

For more information on searching name availability, name endings, and other company name requirements or restrictions, please read this.

Find out more about articles of incorporation considerations, and get sample articles of incorporation here.

To learn more about starting a new LLC, read this.

After Your Initial Filing

Most states require a corporation to elect its directors and officers at least annually. This is normally done at its annual meetings of shareholders and directors, respectively. Other regular or special meetings may also be held, and resolutions adopted. Such formalities should be documented in the minutes. You can read more about this here, and in the related articles linked at the bottom of that page.

A corporate records book is a good investment, and a convenient way to efficiently keep your minutes, resolutions, by-laws and stockholder information together. You can purchase corporate kits for about $40 to $100 or more, depending upon how elaborate you want to get. A standard records book - for cheap incorporation - will come complete with custom tabbed section dividers, fill-in-the-blank organizational minutes and resolutions, waiver of notice, waiver and sample special meeting minutes, sample by-laws, about twenty blank stock certificates, a stock transfer ledger, and your corporate seal. The corporate seal may be a metal embosser or a rubber stamp. The documents and seal usually fit neatly into a three-ring binder that lives in a slip case.Expensive kits may come with gold-leaf lettering and fine linen or cotton rag paper; however, the extra expense and attractive look and feel add nothing to your corporate veil of personal liability protection.

Filing articles of incorporation with your state agency is only the beginning of your corporate duties. The organizational minutes and subsequent formal documents, including minutes of your annual meetings, general, special and committee meeting minutes, resolutions, and other documents can be vital to maintaining and strengthening your corporate veil, protecting the officers, directors and stockholders from personal liability, and obtaining certain tax benefits. Do not neglect these important formalities. It is much easier, better – and cheaper – to keep your formal corporate minutes and records up to date from the start, than it is to try to reconstruct events and draft documents after years of neglect. Forewarned is forearmed!

Conclusion

A cheap incorporation solution can be as good (or bad) as an expensive alternative. The “substance” of your company may be as important or more so than its “form” should you find yourself involved in litigation or a tax audit. Always keep personal and company business separate. Maintain good and timely corporate minutes. Consult your professional legal and tax advisors for information and advice.

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