Drunken Noodle Tip #1

ImageBeware of the I need to “Be Official before I’m Official”syndrome

Incorporating:

I know business professors and some people in business may not agree with me (I am sure Uncle Sam does not agree with me).  So many people get obsessed with this aspect of the business for the sake of feeling official that they neglect the important part. It’s better if you’ve sold your first product or gotten your first client before you legally start the business.You also need to delay some of the big costs when you first launch your idea. That is unless, it is absolutely necessary for your industry. But most of the time it is not.

Incorporating your business on the low end usually costs around $150 or so (give or take depending on the state) on the high end it can cost thousands to get a lawyer to do it for you.The big advantage that you will get from and LLC on INC don’t happen until you are actually profitable. You can incorporate at any time if you are lucky enough for your business to take off. When you incorporate, that means you have to start paying TAXES. Before you incorporate, do your due diligence to be sure that it’s actually going to make you money and this is an idea you are going to commit to. If you decide it’s not going to work or it’s going to take you longer to start the business, but you already incorporated, then you still have to file an annual report every year, and you haven’t made a dime. You don’t want to be in this position.

If you don’t file the annual report because you decided to defer what you were doing, you’ll have a $500 fine to pay. You don’t want IRS to come knocking on your door. That’s the main reason to delay it, because not paying taxes can break you. It can ruin your company. It can ruin you.

 

One Comment Add yours

  1. Shelley says:

    Wow I really never knew about that! That’s good to know!

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