Should You Incorporate Your Business Online?

So you've decided that the tax advantages and protection of limited liability of an LLC is perfect for your business. You now have to decide: incorporate your LLC online, use an attorney, or do it yourself.

Let's break down the advantages and disadvantages of each method.

Online Incorporation

Incorporating your business online is the fastest method. It is also the middle option in terms of price--more expensive than doing it yourself, much less expensive than an attorney.

It's not hard to find a service that will incorporate or form your LLC online. Just type "online incorporation" into google, and tons of sites will pop up. A bewildering array of prices and offers will show up.

Which one is right for you?

Try looking at these reviews of the Company Corporation and Bizfilings--2 of the largest online incorporation companies.

Using an Attorney

Hiring an attorney to form your LLC is the most expensive method of incorporating your business. However, if you have complex financial or ownership issues, you might require the services of an attorney versed in corporation and tax law.

How complex is "complex"?

If you are incorporating an ongoing business, your tax situation might be complex. If your business will have multiple members who contributed different amounts of capital to the business, particularly "in-kind" property, then your tax situation will be complex. By in-kind property, I mean property other than cash. This could be equipment, land, buildings, patents, websites, and so on.

If you plan on having some members of your LLC be passive investors while others are active, then you might need an attorney to draft your operating agreement.

Forming an LLC Yourself

Forming an LLC yourself is relatively simple if you have the patience to fill out government forms. It's only advisable to do so if your tax and ownership situation is simple.

By simple, I mean incorporating a newly-formed business that has not entered into many transactions. Often, people will form the LLC before they begin operating their business. That is ideal.

Forming your LLC consists of three steps.

1. Download and complete an Articles of Organization form.

2. Download and complete an application for an Employer Identification Number (EIN).

3. Create an operating agreement for your LLC.

Other Articles of Interest

Avoid Double Taxation with an LLC

LLC and Corporate Taxation Compared

S Corporations and LLCs Compared

Reduce your taxes and your chance of a tax audit with the Ultimate Tax Guide.

Return to LLC Made Easy Home

Reduce Your Chance of a Tax Audit by 90% by Forming an LLC