Establishing a business requires not only the industry-specific professional expertise of one’s trade, but also a comprehensive understanding of the regulatory framework and the different laws in local, state and federal levels.
Business formation is a necessary early step in the process of starting a new company and this phase begins with the selection of a legal structure.
There are several different ways to set up a company and this strategic decision will create a direct impact on the rights and responsibilities of the owner in a wide range of key issues and therefor should not be taken lightly.
These matters include the personal liability the founders will face and the level of legal protection they will enjoy, how taxes are paid, administrative simplicity (the amount of recordkeeping and paperwork the business will be required to file), the ability to raise money, cost of formation, expected future needs as well as other important legal and business aspects.
The most common business ownership structures are:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Corporation (S corporation, C corporation)
The entrepreneur needs to thoroughly compare the various alternatives, understand how each one works, carefully examine their pros and cons, evaluate the different risks and rewards that each option offers and eventually choose the optimal legal entity format based on the organization’s unique nature, goals and needs.
Since the legal organizational structure selection process can be quite complicated for many first-time business owners and since errors can be extremely painful and costly, planning ahead and making the best possible decision right from the start before actually opening the business is very important.
Picking the right type of corporate form before registering a business, can significantly help maximizing the chances of administrative, operational and financial success.
What Is Incorporation?
A corporation is a legal structure for a business (especially a large one), established by individual(s) under the laws of a state in which it is incorporated.
It offers unique characteristics which are different from other common structures, such as a limited liability company (LLC), partnership or sole proprietorship.
In legal terms, it’s an independent entity, totally separate from its owners (the shareholders), directors and employees – the individuals who create, own, control and operate it day to day.
As a result, the shareholders are not personally liable for the business’s actions and debts, in case it’s subjected to a lawsuit or a legal claim.
The legal process used to form a corporation is called incorporation, which involves drafting and filing legal documents called “Articles of Incorporation” with the Secretary of State.
These forms list the primary purpose of the business, its name and location and the number of shares and types of stock issued.
What Do Business Formation Websites Offer?
According to U.S. law, people who wish to register a new business are not obligated to hire an attorney in order to prepare and file all the necessary paperwork, required to create the desired corporate structure.
Individuals who wish to form a company can do it by themselves and there are many books, guides, manuals and other self-help kits and products that are sold in the market, which explain the ‘Do-It-Yourself’ approach.
However, since forming a business in the United States can be a tedious, confusing, lengthy and stressful process (especially for first-time entrepreneurs), many choose the path of using a commercial online incorporation website.
Services of such websites include the registration of S Corp, C Corp, LLC, Nonprofit Corporations and other common entities.
The service includes the preparation and filing of all relevant documents and forms.
The process typically includes the following steps:
- Entity type selection
- State of formation selection
- Package selection
- Providing information about the business via an easy to use wizard / questionnaire.
- The service prepares the paperwork and files the documents.
- The customer receives his completed filings.
Using a professional online business incorporation service for the purpose of company formation offers a number of useful advantages:
- Affordability: It’s a good way to save money on expensive legal fees and expenses.
In most cases, the internet-based services provide a far more affordable alternative, compared to the traditional lawyer and accountant approach.
- Time Saving: Using a business formation company relieves the customer from the discomfort and hassle of dealing with daunting bureaucratic tasks, endless procedures and formalities and complicated legal processes.
The incorporation service prepares and files all the necessary paperwork on the client’s behalf.
- Multi-Jurisdiction Support: Users have an easy way of registering a company in multiple states.
- Customizable Packages: Customers can choose basic plans and add extra features like kits and seals.
- Nationwide Service: Ability to file in all 50 States and Washington DC.
Paying for Company Formation with PayPal
Even though PayPal is one of the most popular payment methods on the internet, the vast majority of incorporation services are not offering it as one of their payment options.
A few players in this market do accept PayPal and hopefully, their number will increase with time.
Before Choosing: Features to Consider
In order to make sure that you receive optimal benefit from using this type of service, it is crucial to conduct proper research and verify that certain features that you need are actually being offered by the providers that you consider.
Doing so will help you decide which document filing company is the best fit for your individual needs.
Such features may include:
- Payment via PayPal
- Online Wizards
- Educational and Instructional Resources
- Business Entity Comparison Tools
- Incorporation Specialist Support
- Free Consultation
- Regular Status Updates
- Lifetime Company Alerts
- Online Access to Incorporation Documents
- Rush / 24 Hour Filing
- Same Day / Next Day Processing Option
- Express / Overnight Shipping
- Fictitious Name (DBA) Registration
- Trademark Search and Application
- Copyright Registration
- Registered Agent Services
- International Packages for Non-US residents