What Is An Incorporation Service? Let’s Take A Look

An incorporation service provider aims to ‘’streamline’’ certain procedural requirements that aspiring business owners need to follow- allowing them to register their company with no hassle, legal fees, or lost-time. 

Most commonly, this means ‘incorporating’ a business as either a C-Corporation or a S-Corporation, or forming a Limited Liability Company (LLC). 

This allows business owners to create a comprehensive legal entity through which they can manage their day-to-day business operations. If you are interested in incorporating your business in the U.S, you will need to satisfy certain statutory requirements- including document filing and finding an adequate Registered Agent. 

Most states will additionally require you to: hold at least one organisational meeting, draft company bylaws, and issue shares. S Corporations, on the other hand, require the filing of an election statement with the U.S. Internal Revenue Service. 

This means that incorporation commonly involves significant procedural red tape and rigmarole, and consequently (if handled independently) can take up significant time and involve significant costs (if you choose to hire a specialised attorney). 

Below we will delineate the benefits of relying on a professional incorporation service provider in a U.S. context.

Why Incorporating A Business Is Important

One of the biggest reasons for why incorporating your business is important is because it allows you to legally differentiate yourself from your company. As separate financial and legal entities, your new business structure will have increased credibility with potential clients- as well as potential employers. 

This is also an attractive feature for future financiers and vendors, which commonly deem S-Corporations, C-Corporations, and LLCs to be more dependable than a sole proprietorship. 

Another (huge) benefit of being separate legal entities is that you will have ‘’limited’’ liability in relation to any business debts that may accrue in the future. As a separate financial structure, your personal assets- such as your car, house, and belongings, will be completely off the table.

If you incorporate, you will also be responsible for the amount of capital that you personally invested into the business , as well as for any business debts that you personally guaranteed in the past (as that makes you personally liable).

Benefits of Incorporating a Business

Incorporating your business can bring in a plethora of benefits for you. As briefly touched on above, you will likely significantly improve your business’s industry: professionalism, brand image, and credibility. 

Moreover, you will be more likely to secure business loans from banks (and other financial institutions), and will be able to sell stock so as to attract investors into your business- contrary to a sole proprietorship.

Having said that, it should be duly noted that (following your incorporation) you will still be required to pay the IRS. Depending on the type of business structure that you chose (LLC, C-Corporation, S-Corporation), you may have to pay a little more or a little less, but the added benefit here lies in the increased flexibility that you will obtain. Being incorporated increases your choices holistically, and this includes areas relating to how your business will be taxed.

This can allow you to enjoy a variety of tax-benefits- particularly in states like Delaware and Nevada where there is no legal requirement to disclose whether you are the legal owner of your business.

Another benefit of reshaping your business into an LLC or a corporation is that it will continue to exist indefinitely; regardless of what happens to you or any other shareholders, your (hopefully) profitable company will be able to continue thriving for decades (or even centuries). 

Whilst not essential, this can be a pretty charming feature for the entrepreneurs that are interested in leaving a legacy behind after they pass. It also makes it easier to sell your company in comparison to a partnership, which can get extraordinarily complicated where one of the active partners dies.

Final Words: Do You Need An Online Incorporation Service?

So, we have discussed the ample benefits that are associated with incorporating your business, and considered whether there are any tangible advantages associated with hiring a professional Incorporation Service.

Before making a final decision, however, you should indubitably carry out your own research, as different providers can offer significantly different services (both in relation to pricing and in quality).