You don’t need a corporation, LLC or nonprofit to start a business. All you need to do is sell something. Anyone can do it. Sell any product or service and then bang!—you’re a business. It’s automatic. No paperwork or filing fees required. You just need to make a transaction.
Sell a cup of coffee at a farmer’s market—you’re a business.
Sell a loaf of bread—you’re a business.
Your kids, when they sell a glass of lemonade—technically, they’re a business.
Since starting a business is actually a simple, the obvious question is why would someone want to start an LLC or Corporation or Nonprofit if it requires them to pay formation and maintenance fees?
The answers can vary widely, but the main reason is always one thing: separation.
When you sell the cup of coffee or loaf of bread at the farmer’s market, there is no legal separation between you and the business you’ve created. You are the business. This business type is known as a sole proprietorship.
In a sole proprietorship, should someone sue your business, they’ll be suing you personally and if successful in their lawsuit, they’ll get not only your business assets, but your personal assets as well. The IRS will tax you personally on the taxable income you made by selling your products and services. This type of arrangement may work perfectly fine for. But if you’d like to limit your liability or find a preferred tax structure, then starting a Limited Liability Company (LLC) or corporation might be for you.
Keep reading to learn more about each entity type:
The vast majority of businesses started this year will be formed as LLCs. Why? The main reason is simplicity.
LLCs were created in 1977 as a way to blend the benefits of corporations and partnerships into an easy-to-maintain entity, giving new businesses the security of a corporation’s asset protection and the no-nonsense tax structure of a partnership. Since their conception, LLCs have become wildly popular with new businesses and are currently the most popular type of new business entity.
These are the main features of an LLC:
Corporations were the original business entity and helped pave the way for business as we know it in America today.
Prior to the 20th century, corporations could only be formed by an act of congress, but through a series of supreme court decisions, the power to form a corporation was passed onto the individual. Corporations remain the entity of choice for large companies and start-ups seeking funding.
These are the main features of a corporation:
|Ownership by Shares|
|Ownership by Percentage|
|Can Sell Stock to Raise Capital|
|Sells Percentage of Company to Raise Capital|
|Investor-Preferred Entity Type|
|State Reports Due Periodically|
|Requires Annual Meetings|
|Owners Can Make Company Decisions Quickly|
|Can Elect to be Taxed as S-Corp|
|Can Elect to be Taxed as C-Corp|
|Possible Corporate Tax Exemptions|
With Incorporate Fast, you can start an LLC or corporation in a just a few minutes.
If you already know the type of business entity (LLC, corporation, or nonprofit) you want to form, you can start and finish the formation process in 5 minutes, right now:
When you start a business, you will establish a permanent public record under your name and address by filing business formation documents. It will be a searchable public document for the rest of time. At Incorporate Fast Inc, we not only will file your paperwork faster than any other incorporation service, we’re the only incorporator that will focus on your privacy. We will not list your home or office address whenever possible. We use our own registered agent service address to be able to omit your home and office address from permanent public records. Ten years from now, you may not want your old office address a public record. We don’t even charge for this. We do it for free. A year from now, if you’d like, you or us can easily change everything from our registered agent address to your home or office, but as a solution we offer continued registered agent service for $125 a year from that point on.