State Incorporation Costs
| State | Corporation Filing Fees | Ongoing Fees |
|---|---|---|
| California | 100 | $25 annual + minimum $800 franchise tax |
| Colorado | 50 | $10 annual |
| Connecticut | 250 | $150 annual |
| Delaware | 89 | minimum $50 annual + franchise tax |
Incorporation costs are the costs a company incurs before it begins active business. All companies require money to form — even LLC and LLP business forms have fees — but the types of fees can vary per company.
The cheapest way to get incorporated is to handle the process yourself. Incorporation is simply a business structure, like a sole proprietorship or a partnership. A limited liability company, or LLC, is a simple business entity that does not require hiring a board of directors or issuing stock.
Choosing a Business Structure
Both types of entities have the significant legal advantage of helping to protect assets from creditors and providing an extra layer of protection against legal liability. In general, the creation and management of an LLC are much easier and more flexible than that of a corporation.
Incorporation expenses up to $3,000 are fully deductible in the year incurred. Therefore, if a corporation is incorporated at a cost of $3,000 or less, the expense can be deducted in full with nothing added to Class 14.1.
You are only able to deduct legitimate business expenses. Legitimate expenses can include: Advertising. Business tax, fees, licenses, and dues.
Under Generally Accepted Accounting Principles, you report startup costs as expenses incurred at the time you spend the money. Some of your initial expenses, such as buying equipment, are not classified as startup costs under GAAP and have to be capitalized, not expensed.
When you form a corporation or LLC, you need to pay a one-time filing fee to the state's secretary of state office. Arkansas, Colorado, Hawaii, Iowa, Oklahoma and Mississippi all boast the lowest corporation formation fee at $50. It costs $310 to incorporate in Texas.
Sole proprietors can incorporate themselves, and there are a number of benefits to doing so. Most importantly, turning your sole proprietorship into a corporation means greater ease in securing financing from a lender. ... Lastly, when you incorporate yourself, you can limit your personal liability.
While each business is different, some states simply stand out as good choices for incorporation. Wyoming, Nevada, and Delaware are ideal choices for incorporating your business due to their business-friendly rules, enhanced privacy, and knowledgeable courts.
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