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Self-Incorporation - Is it Right For Me?
by Stephanie Larkin
Many businesses can benefit from incorporation. The main benefit of incorporation for
most businesses is that it shields the business owner from lawsuits and protects their
assets in the event that the company is the target of a lawsuit. Because the company is
established as a separate entity from the partners, the assets of the partners are not
affected by a judgment against the company. While the risk of a lawsuit may seem remote,
it is actually a major concern for small businesses.
Small businesses encounter many challenges; however, other options do exist in place of
self-incorporation. Many self-employed or independent consultant or contractors utilize a
portable employer of record. Working with this kind of company allows workers to remain
independent but enjoy the benefits of W-2 employment.
Most portable employers of record offer everything from access to group health insurance
to coverage with general liability insurance, and may have tax savings programs similar to
the advantages of being self-incorporated, such as the ability to get reimbursed pre-tax
for allowable business expenses.
Ultimately, a business owner must do what is best for his or her company, whether that
includes utilizing a portable employer of record or self-incorporating. There are benefits
to incorporating a business, including tax advantages and structuring the business in a
way that makes it easier to sell later, when you are ready to retire or move onto something new.
Many small business owners know that it is a good idea to incorporate their business,
but are put off by the expense. While it is true that you can pay an attorney to handle
the incorporation process for you, you can save a great deal of money by self-incorporating.
While you can complete the process for any type of incorporation yourself, a limited
liability company is the least complicated corporation to establish. The LLC works well
for sole proprietorships or simple partnerships. You are able to maintain control of your
business, without handing it over to a board of directors, and, in most states you are not
required to have bylaws.
Can I Complete the Incorporation Process by Myself?
If the expense of hiring a lawyer to complete the incorporation process is been what
was stopping you from forming a legal corporation, you should investigate the necessary
steps for self-incorporation. Particularly if you are under no time frame, the incorporation
process is straightforward enough that you should be able to complete the process on your own.
Each state has its own requirements on establishing a corporation, and it is important
to visit your state's Secretary of State website to determine what the process is in your
jurisdiction. Generally, you will be required to complete the paperwork and pay a fee to
become incorporated. Often, either through the Secretary of State's office or a local
small business group, you can attend a workshop on incorporation, and perhaps even receive
free help with your paperwork.
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