Incorporating With or Without an Attorney
Incorporating involves preparation of paperwork. Should you hire an attorney or do it on your own? What are the advantage and disadvantages involved? How much would it cost if you employ legal aid?
Our guide will help you answer questions about whether you should incorporate with or without a lawyer.
Incorporating a business can be done with or without an attorney. Of course, having an expert as guide would make the process easier and faster, and increase the chance that you would do it right. But it would also cost money. Lawyers usually ask a flat rate of about $600 for helping clients fill out documents and understand the process, and for reviewing paperwork. And the bill goes up depending on the number of shareholders involved and the complexity of the agreement between shareholders, and of how the company plans to conduct its business. If you plan to launch a massive share issuance, expect to be served with a five-digit bill.
Before deciding whether to hire an attorney to help you incorporate your business, keep in mind that you can also do it on your own by following state-issued guidelines. Call or visit the office of the Secretary of State to inquire about the process or search for your state website to find downloadable documents on how to incorporate a business in your state.
Normally, you'd have to choose a name, identify board of directors and officers, create your article of incorporation and provide other information that might be required by your state. You might find samples of related documents. Use that to guide you in drafting your article of incorporation. You then send the certificate of incorporation with the filing fees to the secretary of state. Once the state approves your application, you will get a certified copy of the articles you've submitted. You will then need to apply for your state and federal tax ID number, obtain special licenses from the state, the federal government or your city, and open a corporate bank account. Visit www.irs.gov for information on Employer ID Numbers.
If all of these seemed too much for you to handle and you think paying someone to get the work done is less costly than spending your time and energy to accomplish these tasks and paperwork, then employ the services of an attorney.
You might also consider getting an attorney if you anticipate your article of incorporation to be more detailed and complicated than usual -- you might need to draft Shareholder or Buy-Sell Agreements, incorporate in at least one more state, face complicated tax or legal issues, or plan to raise capital by selling shares.
If you need to get an attorney, hire one that practices near where you are or where your business is located so you can save on expenses. If you need to transact business in other states, ask an applicant if he is allowed to practice in those states or has a network with other attorneys there. Also look for an attorney who specializes in the industry of your business.
Also be aware that you can also incorporate your business with the aid of interactive software programs, and online incorporation companies (which charge less than lawyers do). Online companies charge between $75 and $115, exclusive of administrative and filing fees and first-year franchise tax payment.
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