How do I incorporate my business before it gets off the ground to save money on taxes?

Question

Or should I incorporate AFTER my company gets off the ground? THANKS

Answer 1

There are several companies that can assist with incorporating or forming an LLC. I work for one called BizFilings. But to form a company you will need to either fill out Articles of Incorporation for a Corporation or Articles of Formation for an LLC and pay the appropriate fees to the state. Several states have the paperwork online that you can print off. If you form a corporation, you also need to decide how many shares you wish to have and at what par value. Also, for either type of company, you need to decide on a registered agent. A Registered Agent accepts state mail and notices of Litigation. It must be physical address and person needs to be available during normal business hours at that address.

If you do not want to do all the paperwork, you can search my company online, and we can help. Also, It will give you more information as well as a number to ask any general questions you might have.

Remember by forming you company with the state you will then have liability protection and your personal assets will be protected.

Answer 2

Interpreting what you say is "before it gets off the ground" to mean "while it is losing money", the best advice is either not to incorporate at all during this period ( so you can deduct expenses of the startup from your income -- assuming you have other income --) OR to incorporate as an "S Corporation" or LLC. Both of these all you to pass the losses or income of your business on to your personal tax return, thus getting credit for the losses.

After you are making money, and especially after the business has grown to where you need to get outside equity capital, you might want to switch to a "C Corporation" which would be taxed as an independent entity. Also, up to about $50K in income, the Federal tax rate for a C Corporation would be only 15%. The only time you would be personally liable for taxes is when the C Corporation declares a dividend.

Answer 3

Incorporate now,.. your putting to much at risk if you wait. Plain and simple.

Answer 4

You need to be talking to a CPA. Every business owner should have one.