When it comes to business structure and formation, many entrepreneurs welcome the chance to incorporate their startups. Being incorporated can bring many benefits to the business owner, but it can also have several costs. The steps necessary to successfully incorporate your startup can be more manageable when you know the costs ahead of time. In this article, entrepreneur Vinod Ramchandra Jadhav shares several costs to recognize when incorporating your startup.
Secretary of State Incorporation filing fee
Each corporation is formed under the laws of the state in which it is headquartered, at least on paper. To incorporate your business, you must file Articles of Incorporation; in some states, it’s called a Certificate of Incorporation, with the Secretary of State. Each state sets a filing fee to be paid when filing your Articles of Incorporation. These fees are generally around $100.
Incorporation service fees
Often filing and other required fees are included in the service fee charged by an incorporation service. These service providers, such as ZenBusiness, MyCorporation, and others, offer incorporation packages that include all the necessary expenses for the state you’re setting up in. These services include preparing the forms and writing the bylaws and charter documents. Depending on how complicated the filing is, packages can run from a few hundred to a couple of thousand dollars.
Registered agent fees
Every corporation must have a registered agent. A registered agent is a person or another business that receives official legal and tax correspondence on behalf of the corporation. It can be you, a director, a shareholder, or another person that lives in the state. It can also be a registered agent service company. Registered agent service firms will charge a few hundred dollars each year to fulfill this service.
DBA filing fee
Many businesses operate under a different name from the corporation’s full or formal name. If you choose to do this, you must file a DBA (Doing Business As) form with the state. There is customarily a small fee for processing this form.
Permit, license, or registration fees
Many businesses must have special permits or licenses to do business in a state. Each permit or license your business needs will require you to file a form and include a fee.
Common permits and licenses include:
- Regulated business fees – bars, airports, etc.
- Sales tax permit fee.
- Home-based business fee.
- City and county business permits.
- Federal and state tax/employer ID fees.
Conclusion
There are many ways to organize your business. Several types of business structures exist to meet the needs of different companies. There are C corporations, S corporations, limited liability corporations (LLC), non-profit corporations, and sole proprietorships, to name a few. Before you incorporate your business, be sure to learn about all the options and choose what fits your circumstances and future plans. Of course, the costs and fees will vary for each type of business, but, to be sure, there will be fees that you need to consider.
About Vinod Ramchandra Jadhav
A self-described first-generation Entrepreneur, Mr. Vinod Ramchandra Jadhav is the Chairman of SAVA Group and Devtech M2M. With a career spanning over two decades, he is well-versed in marketing, sales, supply chain management, and regulatory and corporate affairs in various capacities. Mr. Jadhav holds a Diploma in Mechanical Engineering and a graduate degree in Materials Management.