How to Incorporate a Business

Incorporation is the process of registering your business as a corporation. Incorporating a business will differ based on which state you’re doing business in, and whether you’re launching a brand-new corporation or converting another business entity to a corporation.

S-corporations and C-corporations are the two main types of corporations. You can switch from a C-corp to an S-corp and vice versa at any time in your business’s life, but ideally, you should know which structure you want to use when incorporating. C-corporations, the most popular, are taxed once at the company level, and distributions of profits (aka dividends) to shareholders are taxed again on shareholders’ personal tax returns. For S-corporations, profits and losses pass through to an owner’s personal tax return and are taxed at their personal income tax rate.

A typical incorporation takes one to six weeks and costs $100 to $500, depending on where your company is located.

Step 1: Comply with licensing and…

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This article was written by Priyanka Prakash and originally published on www.nerdwallet.com