The benefits of incorporating are numerous; personal asset protection, retirement fund allocation, durability, capital raising facilities, credit rating, multiple ownership and tax benefits. Yet, many entrepreneurs, upper tax bracket individuals and other small business owners fail to incorporate appropriately and protect themselves and their most prized accomplishments. In the United States, corporations are legal entities recognized as people. They can be filed as varying structures such as non profit organizations, profit organizations, fictitious persons and the such. Furthermore, corporations can very well outlive their owners and do not by default have a termination or dissolution date such as partnerships and other legal entities. However, having decided to incorporate is not the only decision that must be made by a small business owner. Many other choices such as where to incorporate, what entity structure to take on and the means of incorporation must all be decided prior to choosing a snazzy name or office location.

A primary concern after having decided to incorporate is selecting a location. In the U.S. everyone has heard of Delaware as being the most typical successful and coveted place to incorporate, yet a standard rule of thumb is to select a location where you will conduct most of your business. Particularly if you have a smaller business that is unlike to expand outside of state limits. It’s important to note than afterwards, should you need to expand elsewhere, filing for a foreign corporation will allow you to do so very promptly and successfully. In other words, its is not necessary to incorporate in Delaware, Nevada or other typical states to run a mom and pop store in Kansas. In addition, should you decide to form an out of state corporation you will have to qualify to do business in your own state – and this is likely to result in having higher costs as well as paying state income tax. Therefore incorporating in corporate friendly states tends to favor large public companies.

The steps of incorporation tend to be simple and succinct. Most necessary legal documents can be filed within a few hours and some companies and attorneys are willing to incorporate your business overnight. Also, many do-it-yourself books exist in states making it easy to incorporate your business without a lawyer. Essentially, there are four choices that you can make when choosing to incorporate: you can decide to do it yourself, hire an incorporation service (via phone, online, mail), use an attorney, or hire a CPA.

There are three main categories of corporate entities. A standard C corporation, a s-corporation and an LLC. Which one you choose depends on how you do business, who the business owners are and how you wish to be taxed. It’s advisable to seek help from a certified public accountant or tax attorney prior to incorporating to determine the best entity for your business. All three types of entities offer personal liability protection as well as offer tax benefits. The main differences result from tax implications, shareholder rights and yearly legal filings. Several large incorporation services websites offer comprehensive tutorials and can also help you decide which corporate form suits your lines of business and interests.