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When entrepreneurs contemplate incorporating their startups, they may take a pause when they see the initial costs, especially if their budget is a thin one. It’s easy to spend more than $1,000 on attorney and filing fees just to get a corporation or LLC up and running, but there are several surefire ways you can cut costs. Below, you’ll find seven ways to save when you incorporate your startup. Take a look:

1. Pick a cheap state

All states are not equal when it comes to filing fees. Some states charge much more to form your corporation or LLC, so if your business is web-based, or you have no storefront, you may want to initially incorporate your corporation or form your LLC in a different state. Idaho, Wyoming, Colorado, New Mexico, and Indiana are some of the cheapest states in which you can form your business entity.

2. Don’t expedite the filing

Unless you want to incorporate your company in Alabama (if you don’t expedite your forms here, you’ll wait about six months for your business entity to be formed), don’t pay to have the filing expedited. In some cases, this will save you more than $100. The average wait time to hear back from a state without paying to expedite the filing is close to three weeks.

3. File online

In many states, it’s not only faster to file your articles of incorporation online, it’s also less expensive. However, not all states have online filing options. Check the filing fees and options with the secretary of state (or your state’s equivalent) to find what options are available to you and your business.

4. Don’t use a registered agent service

Although third-party registered agents do offer plenty of helpful services, your company may be able to do without one. Your business cannot be listed as its own registered agent, but any individual that can accept mail during normal business hours and has a physical residence in the state where you form your company can be designated as the registered agent.

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About Drake Forester

Drake Forester is the chief legal strategy officer at Northwest Registered Agent Services. Drake guides the company and its clients through the vast world of bureaucracy we all deal with when running a business. He specializes in researching and understanding the complexities of business entity compliance and tax strategies.

  • Rina

    Could not disagree more. Picking a state based solely on cheap filing fees will result in higher costs – such as registering to do business in the state where the business is actually located – not to mention potential tax consequences.

    Deciding which entity to form is a vital decision that a business owner must make. Not consulting with an expert in the field (i.e. an attorney) will result in lost time and wasted money.

    Using standard forms is the biggest mistake a business owner can make, especially if there are partners involved. Having the proper operating or shareholders agreement in place at the outset will save countless headaches down the road.

    Business owners do yourselves a favor: spend your time doing what you know how to do best – running your business- and leave the legal stuff to the professionals. It is easy to find an attorney who specializes small businesses and who will become a trusted advisor.

    • http://www.northwestregisteredagent.com Drake Forester

      Hi Rina,
      You are certainly correct that if you have a storefront, employees, or any type of physical presence, you will also need to register in your home state, hence costing you more money, and yes, your taxes won’t be as straightforward at the end of the year, but the point of the post is that if an entrepreneur operating on a razor thin budget wants the protection of an LLC or corporation, with some research, they can decide which entity is best and form it themselves. And “the biggest mistake a business owner can make” sounds a tad hyperbolic. Sure, if you’ve got a lot invested with several different investors, you’ll want custom operating agreements or bylaws, but if you have a lot to invest in the first place, you’re probably not sweating things like incorporation fees.

    • Drake Forester

      Hi Rina-

      You are certainly correct that if you have a storefront, employees, or any type of physical presence, you will also need to register in your home state, hence costing you more money, and yes, your taxes won’t be as straightforward at the end of the year, but the point of the post is that if an entrepreneur operating on a razor thin budget wants the protection of an LLC or corporation, with some research, they can decide which entity is best and form it themselves. And “the biggest mistake a business owner can make” sounds just a little hyperbolic. Sure, if you’ve got a lot invested with several different investors, you’ll want custom operating agreements or bylaws, but if you have a lot to invest in the first place, you’re probably not sweating things like incorporation fees.

      -Drake