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Seven Tips for Incorporating in Florida

New small business owners often want to consider the incorporation option. And that's logical. Incorporating a small business usually reduces the business owners legal liability. And incorporating also often saves the business owner and any outside investors substantial taxes.

Sometimes business owners will work with an attorney or accountant to get their help with the incorporation. Other times, business owners will work with a paralegal or online incorporation service. And some experienced entrepreneurs will simply employ a do-it-yourself approach to incorporating.

In all of these cases, however, new small business owners and entrepreneurs should consider the following seven tips.

Incorporation Tip #1: Consider both an LLC and a corporation

Here's a first tip for you: Don't automatically choose a regular corporation. In the state of Florida, you actually have two great options for legal liability protection. You can go with a regular corporation. Or you can use a limited liability company.

Many attorneys and accountants, interestingly, recommend the limited liability company rather than the traditional corporation. An LLC requires less up-front paperwork and easier on-going administration. Furthermore, a limited liability company lets the business owner choose how the entity will be treated for federal income tax purposes. But more on this later.

Incorporation Tip #2: Research The Business Names Available

Obviously, before you get too far down the incorporation road, you will want to check on the availability of the name you want to use for the LLC or corporation. An easy way to do this is to use a Google search on the name you want to use.

Incorporation Tip #3: Get Free Forms from the State of Florida

Even if you're going to employ an outside professional or work with an incorporation service, you should grab the free forms and instructions available directly from the state of Florida. You may choose to complete the forms yourself. And the forms, at the very least, will help you "ask the right questions" if you have someone else prepare the paperwork for you.

One web page address you can use to get free LLC and incorporation forms is here.

Incorporation Tip #4: Pick a Multi-State Friendly Name

If you plan to operate your corporation or LLC outside Florida, you should pick a name that works in all the states in which you'll potentially do business.

A corporation name that ends in "Corporation," "Corp," "Incorporated," or "Inc." works, for example. And an LLC name that ends in "Limited Liability Company," "LLC," or "L.L.C." also works. The other allowable Florida corporation and LLC names are not always allowed, unfortunately.

Incorporation Tip #5: Don't Forget About the EIN

You will probably want to get an EIN for your new LLC or corporation. (The only time this won't be the case is if you're setting up a one-owner limited liability company that won't have any employees.)

One easy way to do this is by downloading a paper copy of the Form SS-4, "Application for an Employer Identification Number," from the web site, complete it, and then mail or fax the completed SS-4 to the appropriate address or fax number.

At the time I'm writing this document, the web address for the SS-4 form is here.

Incorporation Tip #6: Remember to Make Any Relevant Tax Elections

Both limited liability companies and corporations may often make elections with the Internal Revenue Service that save the business substantial amounts of income and payroll taxes. A regular corporation, for example, can often make an election to be treated as a Subchapter S corporation. And an LLC can make an election to be treated as a corporation--and sometimes even as a Subchapter S corporation.

You'll want to consider making these elections. A good place to start your research is at the IRS's web site,

Incorporation Tip #7: Get Help if You Get Stuck

And a final, important tip: If you have trouble getting the State of Florida to process your articles of organization or articles of incorporation, or trouble getting the Internal Revenue Service to process your SS-4 or an election, attempt to immediately resolve any problems by telephoning the Secretary of State's office or the local IRS office.

In most cases, you'll find the customer service people surprisingly helpful and very friendly. And if you're stuck, an easy answer from the appropriate government agency may be all you need to put the incorporation process back on track.

About the author:

CPA Stephen L. Nelson is the author of Maximizing Employee Retention Credits.