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How to Form an LLC or Incorporate a Business

So, you’ve done your research and decided to form an LLC or incorporate your business. Maybe you want to protect your personal savings and other assets, maybe your financial advisor mentioned you could save in taxes, or maybe you simply need a legal structure to win a large client contract. Whatever the reasoning, it’s time to take the next step for your business.

The only question is how?

For the small business owner, this process raises many questions. Where do I start? How much does it cost to incorporate or to form an LLC? How long does the process take? Can I form my own corporation or LLC or is an attorney required? In this post, I’ll break down the steps required to incorporate a business or form an LLC, as well as explain the three different methods: do-it-yourself, legal filing service, or an attorney.

In most cases, you can set up an LLC or Corporation with the secretary of state’s office for whichever state you choose as your ‘state of incorporation.’ And as a general rule of thumb, if your business will have fewer than 5 shareholders, it’s best to just incorporate in the state where you actually live or have a physical presence.

How to Form an LLC or Incorporate a Business [1]

Here’s a quick overview of the process for both the LLC and Corporation:

How to Form an LLC

The LLC requires much less formality, while still protecting the personal assets of the business owners from any liability of the company. For an LLC, you’ll need to file Articles of Organization or Certificate of Organization with your state’s secretary of state. While the LLC is less formal, these documents must contain at least the minimum requirements as described by state law before they can be successfully filed (and your LLC processed).

How to Form a Corporation

To form a corporation, you’ll need to take the following steps:

How long does the process take?

Depending on the state and its current workload, processing time may vary from 1 day to 3 months. Unfortunately, as states are facing budget issues and staffing cuts, we are seeing longer backlogs, particularly at the beginning of the year. There’s also a ‘rush filing’ option, which in many states must be done via walk-in delivery. If you’re filing yourself, you can bring the completed forms in person to the secretary of state’s office. And if you’re using an online filing service, they will have a courier located near the state office to bring in your forms for rush service.

How should I file?

The three methods for filing your Articles of Organization or Articles of Incorporation are: do-it-yourself, a legal filing service, or an attorney. For full disclosure, I am founder and CEO of CorpNet.com, an online legal filing service, but will hopefully provide objective advice here, because depending on your specific situation, each option has its own set of pros and cons.

When it comes to legal matters, I’ll be the first to say that trying to save a few dollars up front can end up costing you big in the long run. Trust your gut; if you feel like you need to bring in expert counsel, then by all means do so. Just remember that you are able to file for incorporation or LLC formation without an attorney, and this could be a reasonable and cost effective way to go. Whatever method you choose, make sure to pat yourself on the back for taking this important step for your business and yourself.