Bottom Line
Asset protection 101
Written for Land Line by Rick Bell of Harvard Business Services, Inc., a Delaware registered agent and incorporation service

Filing in your home state is the cheapest way to incorporate.  You simply call your state's Division of Corporations and request the forms

What is the best way to incorporate? Once you've decided to protect your personal assets by forming a company (or a series of companies), the question arises: What's the best way to incorporate?

There are three ways to incorporate. First, you can file the papers yourself. Second, you can use a lawyer or an accountant to incorporate for you, or third, you can use a registered agent that specializes in forming companies. Any of these ways work. The question is which is best suited for you.

Filing in your home state is the cheapest way to incorporate. You simply call your state's Division of Corporations and request the forms. The forms are not complex, they are very easy to fill out. Most states will offer you help if you request it. Twelve states allow you to download the forms from the Internet (Colorado, California, Florida, Georgia, Hawaii, Kansas, Louisiana, Maine, Minnesota, Oregon, South Dakota, and Wyoming). Remember to check the availability of your desired "company name." Most states charge $10 to $35 to reserve a name, but there are exceptions. (Texas charges $40, Pennsylvania charges $50 and Wisconsin charges $52.) Filing fees in most states are less than $100, but New York, Texas, California and Georgia will cost you anywhere from $500 to $1,100. The advantage of filing yourself is the rock-bottom cost. The hassle is in dealing with the bureaucracy.

Using a lawyer or an accountant to incorporate is often the most expensive way to form a company. Typical charges run from $500 to $2,500. It usually involves a visit to their office and a thorough review of your legal and financial situation. They will explain to you the differences between a sole proprietorship, a partnership, and a corporation. After you explain your liability situation, most lawyers will advise you to incorporate regardless of your tax situation. Accountants will usually advise you to incorporate if you can save on taxes (which usually means $30,000 in net take-home pay). The advantage of using a lawyer is that only a lawyer can give you legal advice. If you need legal advice you should talk to a lawyer near you.

Most lawyers and accountants will either file your papers themselves with your home state, or use a registered agent. At Harvard, 35 percent of our business comes from attorneys and accountants.

One of the fastest and most efficient ways to incorporate is to work through a registered agent. Registered agents specialize in forming companies for people. There are about 50 companies that perform this service, and all of them have web sites that can be found by searching for "Incorporating Services" on your favorite search engine.

Registered agents will be happy to answer any questions you have and explain the process to you. Most agents can form your company the same day you call. They can provide the corporate minute book and company seal, and will usually offer optional services such as mail forwarding and telephone answering for your company. Some agents even offer tax services through an in-house accountant. They charge a small service fee over and above the filing fees, but they deal with the government for you and guarantee that your documents are correct and filed properly. This choice is time efficient and in most cases can save you money.

The most important part of incorporating, however, comes after you form your company. It's important to notify your insurance carrier, change the name on your titles and your authority. After you've formed your corporation, call Debi Richardson at OOIDA. She'll be happy to help you change the name on your authority. It costs only $39 and takes three to four weeks.