So, you’re ready to take the first step and formally start your company.Officially, that means one thing: filing your company with the State. Unofficially, we know that decision has come after months of planning, preparation, brainstorming, and more. Congratulations, on taking this important step!
In this post, we’ll talk about the key differences between LLCs and S-Corps, recommend you have a few key decisions figured out before taking the plunge, and highlight a couple of resources on getting it done.
Incorporating your company means that you’re formally introducing your business as an entity separate from yourself. And, it’s important to do this to limit your liability and protect yourself and your assets. There are a couple different pathways you can take when incorporating, an these include forming an LLC or a S-Corp. LLCs and S-Corps vary in several ways, and will have implications on your yearly reporting requirements, tax filings, and corporate structure. Choosing the right structure for you is important, and while it’s possible to change once you’ve picked one, it requires another filing, and therefore another fee.
Here’s the skinny: For 95% of nutrition entrepreneurs, forming an LLC will be the way to go. Unless you’re raising significant outside capital to fund your endeavor, or taking out loans in the short-term, an LLC will offer some tax advantages and reduce the paperwork / overhead you’ll need to manage, which is an important consideration, particularly when you’re just getting started with your army of 1. Of course, we recommend consulting a lawyer before finalizing your decision.
Believe it or not, you can actually get pretty far with your private practice pursuit before actually incorporating. Here are some pointers to help you confirm that you’re ready to incorporate.
- You’ve thought about your marketing strategy and your brand, Having a clear idea of this before you incorporate means that you’re not spending significant time “post incorporation” with these early-stage tasks.
- You’ve considered your target audience, your specialty, and other differentiators. Plus you have an idea of who your first client may be.
- You’re sure that private practice is the route for you – incorporating a company will cost a few hundred dollars, plus some ongoing costs each year. The actual numbers will vary by state. Be sure you’re ready for that investment.
How to do it:
- Understand your state’s process. Depending on where you live, the process, requirements, and fees will vary. Delaware and Wyoming are known for having some of the most “business friendly” terms for LLCs.
- Consult a lawyer. This step is optional, but highly recommended as you think through operating agreements and other required business formation documents (more on this part later).
- Work with an agency or online resource. If you’re working with a lawyer, they’ll be able to help. If you’re trying to save a few bucks, resources like Legal Zoom can do the trick – just make sure you’re getting the expertise and guidance that you need. Most states also have filing agencies that will help you out.
Check out these resources for additional opinions and suggestions