Incorporation is the process of setting up a corporate entity. During this process certain documents are filed with the authorities concerned. These documents provide general information about the entity, which is commonly known as a corporation.
More specific information about a corporation is contained in certain other documents, which are often referred to as by-laws. Incorporation is useful for small business owners, as it protects them and other shareholders from certain liabilities. After incorporation of a business, the personal assets of shareholders are safe; business creditors cannot lay claim on their personal assets.
But before you decide to incorporate your business, you should be aware that there are certain costs which you will have to bear. These costs vary with circumstances and mainly include attorney's fees, filing fees and certain tax payments.
It is not necessary to hire an attorney for this process, but there are many legal documents and formalities which need to be completed. An attorney or a business law firm can expedite the process, as they will take care of all the documentation which is needed. Certain firms also help in organizing the first meeting of the shareholders. If you do not want to pay a substantial amount, then you can prepare all the documents yourself and then get them checked by an attorney.
Then one has to bear expenses in the form of administrative and filing fees. The amount of fees depends upon the state in which you are incorporating your business. Then there is first year franchise tax. Various state governments charge this tax in lieu of the opportunity offered to you of doing business as a corporation. These taxes could cost you around a thousand dollars. However, the tax rates may vary according to the state in which you have incorporated your business.