Incorporate for free (Until Friday)

by tialys • 18 years ago

31 27 18 years ago

mdasen• 18 years ago

One thing to realize: If you Inc/LLC in 2008, you'll have to pay any taxes/fees due for 2008. Forming a DE LLC right now would cost you more money than waiting until Jan 1 and paying the $150 because you'd have to pay the $250 franchise fee for 2008. LLC on Jan 1 and you don't have to pay it for 2008. You're up $100 even with the $150 fee.

tialys5• 18 years ago

Sorry, I'm new to this whole thing... what is the $250 franchise fee? Is it federal or state and is it required for ALL LLCs or just DE? I'm looking to incorp. in Michigan with a buddy of mine, is this going to to screw us come tax time? We probably wouldn't make ANY money until next year at the earliest, in fact we'd have losses (web hosting).

mechanical_fish• 18 years ago

It's a state fee and it varies by state. It can go by different names in different states. (In MA an LLC pays an "annual report filing fee" of $500 a year.) It can be different for LLCs and corporations. (In MA corporations pay only a $100 filing fee. Apparently somebody in Massachusetts does not like LLCs.)

Ask a Michigan accountant.

caveman82• 18 years ago

Last time they had this deal (a few weeks ago), there was an option to defer filing until Jan 1st, to save on 2008 fees and administration tasks. I assume you can opt to do so again.

tialys5• 18 years ago

Very nice, they actually bold and 'recommend' it (for tax reasons)

shawnee• 18 years ago

But this isn't necessarily a bad thing: all costs of incorporating can be classified as tax-deductible business expenses. Also, when you start a corp or LLC, you can technically choose when to start your business cycle for the tax purposes: that is, your fiscal tax year can be whatever you want, it doesn't have to coincide with standard calendar dates.

hbien• 18 years ago

Good catch, I formed an LLC way too soon and got stuck paying the $800 franchise tax in CA before I was even making any revenue.

rksprst2• 18 years ago

You can defer that payment for up to a a year (when you're hopefully profitable). Or, you can have your LLC taxed as a C-Corp and then you don't have to pay the $800 franchise tax like other LLCs.

tialys5• 18 years ago

Quick note: Apparently you need to click the link and use the code "MYGIFT" to get the $150 discount.

Brushfire2• 18 years ago

Alternatively, in many states the forms are simpler and cost less (I'm assuming this free deal has a catch), and don't require you to give your info to another company.

For example, this is the Indiana form to do it online: http://www.in.gov/ai/appfiles/sos-registration/landing.html . Cost? For profit organizations: $85.00

Granted, this wont set you up with bylaws, formal/complete articles of incorporation/organization, etc. But if you are small, those don't matter, you can do them later, and if you arent small/simple structure you wouldn't use mycorporation anyways.

According to most Attorneys I know who deal with investment/securities stuff, unless you are in a handful of states, the idea that you need delaware org is sort of a leftover thing from the past. As usual, though, you should check with an attorney or accountant who knows your state.

blurry4• 18 years ago

If you do business in any state, you need to foreign-qualify in that state, which involves the same and sometimes even greater fees than if you just register locally as a domestic corporation/LLC.

For example, incorporating in Indiana doesn't save you from New York fees if you do transactions in New York. Transacting has different definitions state by state, and may include anything from accepting orders to having remote employees who work in that state. Most importantly, having a physical office in a state always requires you to foreign-qualify, so registering in another state doesn't really work for companies that are not fully virtual.

Speaking of virtual... does anyone follow the development of Vermont Virtual Corporations? What are the advantages, limitations, etc?

Brushfire2• 18 years ago

I would agree with you, when it comes to most non-virtual companies. There are also tax implications.

But for virtual companies, this is all solved by jurisdiction on the purchase contract, I believe. In other words, people placing orders on your website is equivalent to them driving to the state and placing them in person. So the transaction is inside state boundaries, and there is no need to foreign qualify in other states.

In addition, I had a company that sold services electronically but also shipped smaller lesser physical items as part (signs for the service... kind of complicated but the actual service doesnt matter). We never had any issues across state lines.

I think employees and locations are what count, for tax reasons, but buyers/consumers get to handle all the rest via use taxes in their state. Contract issues above apply.

At least, this is what I have been told, I'm no attorney.

No idea about Vermont, sounds interesting though.

rp• 18 years ago

Please remember that the only thing that is "free" is the fee that you would pay this company to do your paperwork. You will have to pay business organization fees to the state of formation no matter what you do (check your state). As noted by others, most states also charge yearly franchise taxes, which is in addition to any federal taxes you are liable for if you see revenue.

tialys5• 18 years ago

Yes but for someone like me (Read: not a lawyer, can't afford one) a service like this can save me a ton of money. I understand there are risks when not working with a lawyer, and I haven't actually submitted yet because my partner and I are discussing this, but in general I think it's helpful if you know you want an LLC/S-Corp and don't need anything complex. You'd have to pay the state fees no matter what, so it's like doing it yourself, only you get some experts to help you out -- free.

redrobot5050• 18 years ago

Don't take this the wrong way, but hit up slideshare.net for "Starting a Business". There's a great tip in a lot of those presentations: Make a (non-family member) accountant your new best friend. Most CPAs have a "checklist" of what needs to be done (tax wise and regulation wise) to incorporate.

ericb• 18 years ago

Has anyone here done this the last time around? What's in it for them? Is there a catch?

rksprst2• 18 years ago

People usually sign up for "extra features". For instance, I signed up to get reminders during the year for when certain things were due. A corp has a lot of filing requirements, and for a fee they remind me.

tialys5• 18 years ago

Upselling you to other services.

Shooter• 18 years ago

The main reason is RA fees.

Most people that incorporate in a different state have their incorporation company act as their registered Resident Agent for the life of the company because it is convenient and cheaper than having an attorney act as the RA. So, incorporation companies offer you something that is very low cost (filing) in an attempt to get you to pay the agent fees for years. They might give up a one-time (stated value) fee of $149 in exchange for X years of $100+ in agent fees. As others have noted, they will also try to upsell you on other products and services ("You need an official corporate stamp for your corporation documents!")

stanley2• 18 years ago

Is it worthwhile to file an LLC in a state other than the one I reside in?

omarchowdhury• 18 years ago

Depends on where you reside. Some states have different tax/fees.

stanley2• 18 years ago

Right, that was my question -- Will I be able to avoid steep fees/taxes by registering the LLC elsewhere?

blurry4• 18 years ago

Stanley - as I said in another thread above, be careful of one common misconception. For most businesses, you need to foreign-qualify in the state that you do business in. The definition of doing business in a state varies, but if you have a physical office or a bank account where you live, you are most definitely considered to be transacting there. In most cases, the savings you get from, say, deducting your home office, will exceed the savings you get from registering in a cheap state.

There is, however, a way to save money that most people overlook. If you don't really need liability protection (say, you are a computer consultant doing projects so your clients can't really sue you for more than the project is worth anyway) you can always go to your city hall and get a DBA (doing business as). DBA's are cheap and usually have no filing requirements. The DBA will allow you to get a business bank account, which will in turn allow you to separate your personal income/expenses from your business, thus giving you the ability to deduct expenses, etc.

elai• 18 years ago

An incorporate for free website seems like one really nasty way to commit identify fraud. You get the complete identity information of people who probably have a good amount of money to milk. (What type of people incorporate, but then again what kind of people would use a free version?)

blurry4• 18 years ago

Not sure if you've ever incorporated. I have, a couple times. In most states, your info goes into the state database that is wide open to the public, so you don't really get any privacy anyway.

mmmurf• 18 years ago

This is a gimmick. You can get the same deal 365 days a year from other companies, just do a google search.

Incorporate for free (Until Friday)

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