Costs of Incorporating
A lot of small businesses decide to incorporate their businesses in order to protect themselves from liability. Protecting themselves from liability is vital because it protects personal assets from business creditors or lawsuits. So why don't all small businesses incorporate? The cost plays a big role.
Attorney Fees
Incorporating without a lawyer is very doable, but not necessarily recommended because you might screw something up and be liable during any legal proceedings.
Most business law firms offer a flat rate package to incorporate a company, usually $500 to $750 for a one partner company. The package usually helps you get your required documents and to set up the first required shareholder meeting. With multiple partners, the fee is increased by around $500 to $1,000. If you decide to try to raise money by selling shares of the business to a large number of peole, attorney fees can start to add up and be well over $10,000.
That said, you can save money by completing paperwork such as certificates of incorporation, charters or articles of incorporation yourself. Your Secretary of State´s office should have the forms. Once you´ve completed those forms, you can have a lawyer review them. That might cost about $500.
One potential hitch: You may have a hard time finding a lawyer willing to merely look over your shoulder. Many lawyers would rather draw the documents from scratch.
Filing fees. You must pay administrative and filing fees. Secretary of State offices charge fees ranging from $100 to $250, depending on the state in which you incorporate. You also may have to pay $50 to $200 in other government filing fees. For example, if you incorporate in New York, you must pay an organization tax of 50 cents per $1,000 of authorized par value stock.
First-year franchise tax payment. Every state imposes these taxes for the privilege of doing business in the state as a corporation. Expect to pay anywhere from $800 to $1,000.
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