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How to Start an LLC in California

California’s economy is one of the most powerful globally, and small businesses make up 99.8% of all companies in California. 

LLCs represent 35% of small businesses in the US. This is because they offer some of the benefits of a corporation, like protecting personal assets without all the hassle and paperwork. 

Starting an LLC in California can be a quick and straightforward process with a little help. 

Your LLC can start generating profits faster than you thought was possible; just follow the steps below.

The Easy Parts of Starting an LLC in CA

Like most formal processes, starting an LLC sounds complicated, but it’s pretty straightforward. The process mainly consists of completing forms with basic information like your business name, address, and what your business does. 

LLCs are the quickest path to success for most small businesses because of owner-friendly policies like pass-through taxation and liability protection.

Liability protection lets you protect personal assets like your home or car when you create your startup. Pass-through taxation enables members of your LLC to skip corporate taxes in favor of individual federal income taxes.

The articles of organization sound formal and complex, but this form is quick and easy to complete in California. Getting an EIN from the IRS is also an easy process. You can grab one online for free.

The Difficult Parts of Starting an LLC in California

It only takes a quick search to learn about the potential negatives of running a business in California. But when you look at creating an LLC, even the bad news isn’t so bad.

Naming an LLC in California can be tricky because of its list of requirements. But these rules have your customers in mind. They are a good guide to follow no matter what state you license your LLC, especially if you plan to operate nationally someday.

There are also some types of LLC, like the series LLC, that California doesn’t allow unless you’re a foreign entity. If you already have a clear business plan, confirm that the LLC structures in California will enable you to execute it as outlined.

Another downside to operating an LLC in California is the costly annual franchise taxes. These come in at a minimum of $800 per year, no matter how little your business earns.

The LLC operating agreement can also be tough to complete, but it’s common for any LLC. In a state known for lawsuits like California, this document can be a strong layer of protection for you and your business.

Local and state licenses can be more complex in California for the same reason. Maintaining an LLC in Cali means paying attention to regular changes in legislation. Headline-grabbing changes from the last several years include The California Revised Uniform Liability Act and The California Consumer Privacy Act. 

These kinds of regulations can make ongoing compliance a headache for small business owners.

LLC services like ZenBusiness can help create your LLC and keep it compliant. This saves time and effort for you, so you can focus on growing your new business.

Step 1: Choose a Business Name

Choosing a name for your business sounds fun and easy, but it’s a very important decision. This step can be pretty time-consuming because California has rigorous naming guidelines. There are several places you’ll want to check for duplicates before you can choose your business name. 

Brainstorm name ideas

As you think about your perfect business name, write out a long list of name ideas. If you jump on the first name you like, it may already be used by another company or website. You’ll want to avoid the hassle of negotiating for your chosen business name.

Add the LLC

Add one of these to your business name if it doesn’t already include it:

  • Limited liability company
  • LLC
  • L.C.C.
  • Limited
  • LTD
  • Company
  • Co 

You might wonder how the business name will impact your branding when naming your LLC. In this case, you can file a DBA (“doing business as”), which is like a nickname for your business. You’ll need to submit your DBA or fictitious business name in the county where you operate your business.

Cut confusion

An LLC name in California can’t include words that could lead customers to confuse your business with a state or federal agency. So, avoid names like The FBI: Fun Business Institute or The San Diego Treasury.

Some terms, like bank, university, or attorney, may require you to show that a licensed individual in that industry is part of your team. 

You’ll also want to avoid words that indicate that your business offers insurance or terms that indicate your business is a corporation and not an LLC.

These regulations help make sure that businesses aren’t misleading the public.

As you choose a business name, ask friends or coworkers what comes to mind when they see your business name. This can help you make sure you are giving people the right idea about what your business does.

Look for state duplicates

Once you have a handful of good business names, do a business search for the State of California to see if your favorite names are available. If the name you choose is too similar to an existing business, you may have your LLC application rejected.

Search the web

Web domains are hot commodities. Check to see if the domain for your business name is available, even if you don’t plan to build a website right away.

Reserving and changing your name

If you’re still figuring things out but want to keep a business name just in case, you can reserve an available name for up to 60 days. Just file a name reservation request!

You also have the option to change your business name later. 

Step 2: Sign Up for ZenBusiness LLC Formation Services

California has more one-of-a-kind rules and regulations than most other states. Their regulations also change more often than you might expect. Maintaining your LLC will mean careful attention to deadlines for annual reports, fees, and taxes. It’s also essential to follow their guidelines carefully when starting an LLC.

Business formation services like ZenBusiness take care of the tricky parts of registering your business as an LLC. They can also help you maintain your LLC status. 

ZenBusiness pricing starts at $49 for the Starter plan, including preparing and filing the LLC paperwork, annual report service, an operating agreement template, and a 100% accuracy guarantee. The Pro plan is $199 and includes expedited filing, an EIN, compliance help, and more. The highest plan is Premium at $299. It has a “rush” filing speed and also includes a business website, domain name, email address, and more.

Agent of Service of Process

California requires businesses to have a registered agent, called an Agent of Service of Process.

This individual or business entity needs to be a full-time resident or corporation in California. They have to be available for company business during normal business hours every day the business is open during the year. The agent of service of process receives legal documents like tax forms and lawsuit notices.

They also maintain a calendar for compliance to make sure your California LLC is on top of required reports. Your agent also maintains an archive of legal documents. This makes it easy for your business to stay compliant when requirements change.

ZenBusiness offers registered agent service free for your first year as an LLC. The service is affordable and essential for any business with a small team and a tight budget. 

They will take care of LLC compliance, so you don’t have to worry about annual filing and other deadlines. They also have expert support to guide your business through challenges that may come up.

Decide on management

The decision of whether your members or an outside manager will manage your LLC is an important one. The Beginner’s Guide to Members vs. Managers in an LLC can help you make this critical decision.

This is something you’ll need to decide before officially filing, as the answer is required on the articles of organization. You’ll choose between a member-managed or manager-managed LLC.

Step 3: File Your Articles of Organization

You’ll work with ZenBusiness to file your articles of organization.

Before you submit, be sure to proofread your forms carefully. Make sure you and your partners are on the same page about the details. 

You can file online, in person, or by mail, and it costs $70. There is an extra $15 drop-off fee if you choose to submit forms in person. 

The processing time after you submit the articles of organization is usually five days. For an additional $750, the state can process your filing the same day you submit it! 

Each amendment to the original articles of organization costs $30. This process requires you to complete another form.

Step 4: Create Your LLC Operating Agreement

The operating agreement is a California LLC mandate. The operating agreement outlines the rules and expectations the LLC members have agreed your LLC will follow. Not all states require one, but even where it is not mandated, it is highly recommended.

This document is legally binding and will help protect your business from internal disputes when challenges come up. 

You don’t have to file the operating agreement formally, but you’ll need to keep any written agreement or amendments with your LLC business records.

Use an operating agreement template

Your ZenBusiness plan comes with an operating agreement template. It can really simplify this complicated process. 

Choices about profit and loss distribution, dividing ownership, and membership structure can be tough to agree on. Starting with this template can smooth the path to logical decisions.

Other things included in the operating agreement include voting rights, adding or removing an LLC member, and even dissolution procedures.

Most of us don’t want to think about the end when a project is only beginning. But outlining a plan for dissolving your LLC will help ensure all members have a clear picture of the future options for your new startup.

An operating agreement will also help ensure the courts maintain your California LLC status. This is just in case your team does something that puts your business in danger of dissolution, like forgetting to pay your filing fees or making changes to the business without amending your articles of organization.

Step 5: File the Initial Statement of Information

You’ll also need to file the initial statement of information within 90 days of forming your California LLC. This costs an extra non-refundable fee of $20, and you can take care of this online, in-person, or by mail.

After the initial filing, you will need to file this statement every two years. This report will include basic information about your business. It has updated addresses and other contact information, along with confirming the main activities of your business.

If you stick with them, ZenBusiness will accept, scan, and archive legal mail for your business. That ensures that these critical communications are all in one place. This makes your LLC records easy to find, which makes it easier to maintain your LLC status.

Step 6: Compliance With California Tax, Federal Tax, and Other Regulatory Requirements

The location and function of your California LLC may mean that you’ll need extra business licenses for the compliant operation of your LLC. 

For example, if you’re opening a clothing store LLC in Berkeley, California, you might also need:

  • A business tax certificate from the city
  • A DBA statement from Alameda County
  • A CalGold certification for health and safety standards

If you operate in more than one California city, you may also need a license in each city where you operate. The CalGold website is a helpful place to get started. 

You may also want to hire legal services to make sure you have everything covered. Incfile is the best online legal service for startups. They can help your team navigate the legal requirements in your local California community.

California sales tax and employee taxes

Your California LLC may also need to register with the California Tax Authority. California is a complex state for taxes. California employer taxes alone include:

  • Employee withholding tax
  • Employment training tax
  • Unemployment insurance tax and disability insurance

Our Guide to Understanding How LLC Taxes Work walks you through the different types of taxes your LLC might encounter. It can give you an idea of how to prepare your business for those taxes.

California franchise taxes

Another to-do on the California LLC tax list is paying your annual franchise tax.

California’s fee is pricier than most other states. It’s an $800 annual fee regardless of your business income. LLCs making more than $250,000 also need to pay an extra fee.

Some LLCs may be exempt from this franchise tax. It’s a good idea to work with a tax professional to ensure that your business pays the minimum in taxes and state fees for compliance.

Step 7: Get Your EIN

An EIN is an employer identification number that the Internal Revenue Service assigns. You’ll need this ID number to file and manage your California state and federal taxes and to open a bank account for your LLC. The IRS offers a quick online form to request your EIN.

An EIN is also required if you plan to hire employees for your business. This ID is unique to your LLC, so you’ll need to request a new EIN even if you had one for your business before filing for the LLC.

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The Beginner’s Guide to LLC vs. C-Corp

Your choice of business entity directly affects your business’s bottom line. It’s why business owners want a clear-cut answer to the classic LLC vs. C-Corp debate.

In both cases, you’re shielded from corporate liability. But there are a few notable differences crucial for you to understand. In this guide, I’ll detail their similarities and differences to help you decide the better entity structure for your business.

Let’s dig right in.

What are LLC and C-Corp?

Let’s take a look at what an LLC and C-Corp mean.

What’s an LLC?

A Limited Liability Company (LLC) is a U.S. business structure set up under state statutes that can be used to own and run almost any type of business. It combines the zero-formality and flexibility attributes of a sole proprietorship or partnership, along with the limited liability protection reserved for corporations.

Since owners can’t be sued for their personal assets, LLCs are a great option for people who want an entity to hold its real estate or other appreciating assets. Even investors and entrepreneurs prefer it because of the tax flexibility and asset protection.

It’s important to note that the IRS doesn’t recognize the LLC business structure for federal taxes. You have to decide between a default tax method or choose to be taxed as a distinct IRS-recognized business entity.

What’s a C-Corp?

Contrarily, a C-Corp or C Corporation is a legal and IRS-recognized business entity that allows businesses to keep their profits in the business. It has an intriguing double taxation effect, which is also one of C-Corps’ distinguishing features.

Here, the company (being a separate legal entity) first pays income tax at the corporate level, after which the shareholders pay income tax on the dividends received from the corporation.

Similar to an LLC, a C Corporation’s legal structure limits the financial liabilities of all owners.

C-Corps are a great option for businesses selling products or having a storefront or employees. However, I wouldn’t recommend it for service-based businesses because of specific tax laws applied to Personal Service Corporation (PFC) that increase payable taxes. Even businesses holding appreciating assets should avoid it due to the tax treatment of asset sales.

The Basics of LLC vs. C-Corp

Read on as I break down the key differences and similarities between an LLC and C-Corp.

Ownership

An LLC’s ownership can be held by a single individual or a group of people. But a C Corporation’s ownership is divided jointly among all its stockholders and shareholders that can potentially be hundreds—or even thousands—in number.

You’ll find most household-name corporations are C-Corps. Technically speaking, anyone who owns stock in any of these corporations is among the company’s owners.

Formation

Although the formation process for both an LLC and a C-Corp is the same for the most part, the additional paperwork is different.

The initial registration paperwork for both corporate structures is similar. But while an LLC must have an operating agreement outlining the company’s financial and operational procedures, a C-Corp needs to come up with corporate bylaws detailing its members, officers, committees, among others.

Additionally, forming a C Corporation comes with additional stipulations that go beyond paperwork.

Unlike an LLC, C-Corps have to elect a board of directors, issue stocks and shares, and hold regular board and shareholder meetings. Company bylaws should outline all these responsibilities and address how they plan on fulfilling them.

If you plan to form an LLC, check out our top picks for LLC services available today.

Capital Raising

As mentioned above, anyone who buys the C Corporation stock technically owns a share in the company. It’s why C Corporations have it far easier when it comes to raising money than LLCs.

You see, ownership of C-Corp stocks generally includes the prospect of selling the stocks for higher prices later, which, in turn, makes the incentive to invest in the higher.

On the other hand, expanding an LLC’s ownership to include stockholders is out of the question. If you register your LLC as a C Corporation for tax purposes, you still won’t be able to issue stocks in your company. To do so, you have to form a new corporation.

This makes fundraising for LLCs even more challenging.

What’s more, C Corporations have it easier when it comes to obtaining foreign investment as well. They don’t have to revise their bylaws to accommodate foreign investments as anybody can buy stock in their company. However, an LLC will have to amend its articles of organization to secure a foreign entity investment.

Interestingly, when foreign investors purchase American real estate, they usually register as LLCs to avoid estate taxes.

Taxation

A C-Corp pays a flat-rate corporate income tax of 21%, after which its owners pay personal income taxes, including taxes on the dividends they receive from the corporation. So if you consider incorporating as a C Corporation, you have to be prepared for double taxation.

Additionally, a C-Corp has the widest range of deductions and expenses out of all the entities. For instance, you can set up employee benefits and then deduct the costs associated with running these programs from your corporate taxes. It’s also worth noting that here, you pay an initial rate of 15% on all earnings after $50,000.

On the other hand, the federal tax obligations for an LLC involve you choosing to classify your business as either a C-Corp or a pass-through entity (sole proprietorship, partnership, S-Corp) to avoid double taxation. Choosing between a pass-through entity and C Corporation is entirely up to you. It’s interesting to note that no other entity has this flexibility.

Imagine you own a shop with a business partner with whom you equally share the business, and the shop generates $200,000 in business profits for a specific year.

When you have a C-Corp, you’ll have to pay a 21% corporate rate tax on the profits, i.e, $42,000. Then, if you take out $50,000 in dividends, you’ll also have to pay a dividend tax rate (15%) on that amount, which will amount to $7,500. As such, the tax burden will end up being $28,500 ($21,000 + $7,500) for each partner.

On the other hand, if you had an LLC taxed as a pass-through entity, you and your partner will have to each pay taxes on half of the business income—$100,000—on your personal tax return. As the income tax bracket for this amount is 24%, your tax bill would amount to $24,000 each.

Limited Liability Protection

As mentioned before, both a C-Corp and an LLC provide limited liability protection to owners, where their owners’ assets are protected from getting seized to pay for the corporation’s debts and liabilities.

For more context, the owners are only liable for the amount they invest in the company—never for the corporation’s liabilities.

5 Tools to Improve LLC vs. C-Corp Incorporation

Business formation service tools, as the name suggests, can help you establish your entity, irrespective of whether you choose to form a C-Corp or an LLC. Below is a list of the five best incorporation services to set you up for success.

IncFile

Over 500,000 businesses have used IncFile to kickstart their business. So you can imagine the kind of reputation and trust this service enjoys on the market, and honestly, it’s easy to see why.

IncFile is a fast and convenient incorporation service that provides you with top-notch offerings for LLCs and C Corporations. It’s also super affordable, allowing you to form your business for free—you only have to pay the state filing fees.

You get access to several amazing features, including company name availability verification, preparation, and filing of articles, next-day processing, and online status checking and document access. Free tax consultation services and lifetime customer support are additional benefits.

ZenBusiness


If convenience and speed matter to you, ZenBusiness‘s LLC services, incorporation services, and registered agent services are just what you need.

Despite being founded in 2015, ZenBusiness has managed to climb its way to the very top, thanks to its highly responsive staff, efficient service, and a worry-free guarantee. What’s more, all its plans come with name availability search, online document access, free account in consultation, and registered agent services, among others.

While the service has a wide range of offerings, I highly recommend it for the LLC services. It handles everything for you, including filings for Certificate of Formation and Articles of Organization, choosing a registered agent, applying for your EIN, and so on.

BetterLegal

BetterLegal assures customers a fast turnaround time, upfront pricing, and a seamless and painless user experience.

Filling the necessary forms hardly takes about 10 minutes, after which the service will commence and complete the LLC formation within two days. You also get access to a large resource center where you can read and learn more about business management.

BetterLegal doesn’t offer a free registered agent on the packages, which is slightly disappointing. But it still has tons of useful features to help you incorporate your business online.

Rocket Lawyer


Rocket Lawyer makes legal services easily available to the average person at an affordable rate.

Its team includes experienced attorneys to answer all your legal queries. Rocket Lawyer has a lawyer directory where you can connect with an expert to consult with on a certain legal topic within minutes. Moreover, you can also choose your state to connect with someone knowledgeable about your state and local laws.

Plus, you can contact your allotted attorney any time you want—via phone, mail, or chat—for advice during the business incorporation process. Rocket Lawyer will take care of everything, from starting your business to managing it post-launch.

Inc Authority


Here’s a shocker: Inc Authority charges no money to incorporate your business. And no, there’s no catch for you to worry about.

Its entity setup process involves zero cost, except for the fees required to your state. You can avail of this service without having to sign up for a free trial or pay for a subscription plan or an upsell.

Inc Authority’s business plans further include beneficial features, like business name check, preparation and filing for entity formation documents, tax planning consultation, digital document storage, and Form 2553 preparation and filing.

3 Tricks to Decide The LLC vs. C-Corp Debate

Now that we’ve covered the basics of LLCs and C-Corps, let’s review a few factors to help you decide between them.

Think About Ownership

You can think of starting an LLC if you want more control over your business. This will allow you to make your own decisions without having to compromise or consider someone else’s values. At the same time, you’ll also be solely responsible for the fate of your business and the risks you take.

In the case of a C-Corp, you’ll have to answer to a board of directors—even if you’re the sole owner of a corporation. Addressing shareholder concerns is another factor.

Consider Your Tax Situation

Filing taxes for an LLC is very simple—provided you choose to be taxed as a single-member entity. You don’t have to separate your personal tax records from your company tax records.

But if you’re okay with the concept of double taxation, a C-Corp would be a better option, especially considering the wide range of deductions and expenses you can deduct from your corporate taxes.

Think About Funding

C-Corps offer more ways to bring in investors (Eg: Common stock, preferred stock). However, having stocks also represents an ownership interest and can lead to owners selling their control of the company in exchange for funding.

Deciding to incorporate as an LLC will put you in a better position to get a loan. An LLC member, such as an owner-operator, can easily use their homes or real estate as collateral for the loan—something that C-Corps cannot.

What to Do Next

I hope this guide will help you make the right choice between an LLC and a C-Corp based on your requirements.

After making a decision, you need to work on launching your business and kickstart operations. Use a reliable incorporation service to launch your business, and then create a solid business plan to outline how to proceed next.

Remember, having a plan is always better than just winging it. Here are a few more QuickSprout articles to guide you in the right direction:

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The Beginner’s Guide to LLC Vs. Partnership

Your business structure affects your taxes, capital funding capability, paperwork, and your personal liability. Rushing to a decision can have consequences—serious ones—so it’s best to review your options carefully.

Many business owners find themselves mulling over LLC vs. partnership business structures. As each choice has its share of pros and cons, you have to consider which one aligns best with your short-term and long-term business goals.

Keep reading as I discuss the differences and similarities between LLCs and partnerships in detail to help you choose the right structure for your business.

What are LLCs and Partnerships?

Before deep-diving into these corporate structures, let’s first define them.

What’s an LLC?

An LLC, which is the acronym for Limited Liability Company, is a business legal entity that combines the operations of a partnership with the limited liability protection of a corporation.

LLCs can have one or more owners called members. Every member has a percentage of the business equity or ownership and is responsible for running the business following an operating agreement.

An LLC is also regarded as a pass-through entity. This enables members to claim the company’s profits or losses on their individual tax returns, which, in turn, helps them avoid the double taxation effect.

It’s due to these benefits that LLCs have become increasingly popular among entrepreneurs.

What’s a Partnership?

A partnership is an arrangement between more than one party—otherwise known as partners—who agree to run a business together. There are four different partnership variations: general partnership, limited partnerships, limited liability partnership, and limited liability limited partnerships.

One significant distinguishing factor between an LLC and a partnership is that the latter must be formed by more than one co-owner. A partnership cannot be created by one entrepreneur and needs at least two partners.

The partners have to create a partnership agreement to define their share of the equity. This share can be of varying degrees, but they must equal 100% in total. For instance, a partnership of three can have stakes of 30, 25, and 45.

Similar to an LLC, a partnership is also a pass-through entity. But while a partnership structure is considered a taxing entity by the IRS, an LLC isn’t.

The Basics of LLCs vs. Partnerships

This section will take a closer look at how the different LLC vs. partnership business structures fare against each other.

Business Formation

Starting a partnership or LLC is fairly similar, but there are a few differences.

There’s a lot of flexibility in who can create an LLC—individuals, corporations, other LLCs, and groups can all form an LLC. Additionally, an LLC can have any members, assuming you don’t elect to be taxed as an S-Corp. If you do, you’ll have to limit the ownership to up to 100 members.

In the case of a partnership, you have to consider the different types of partners you need before choosing a partnership business structure.

A general partnership, for instance, can be owned by two or more partners, irrespective of who they are. But to form limited partnership ownership, you‘ll need at least one “general partner” and one “limited partner.”

Similar to an LLC, partnerships don’t have any limit on the number of partners. Their share of the company and the profits for every partner should be indicated in the partnership agreement.

Moreover, a partnership may come to an end if a partner dies or decides to sell his ownership stake. But, unless an LLC has a specific dissolution date mentioned in its articles of organization, it’ll have an unlimited life.

Limited Liability Protection

This is the most crucial difference in the LLC vs. partnership debate.

Suppose you cannot repay a debt to your business owners for whatever reason. Wouldn’t it be nice to know your chosen business structure protects your personal assets from your business creditors? An LLC gives you that protection by limiting your liability.

That said, there are times when LLC members may be personally liable for a debt. This can include mismanaged business affairs, engaging in illegal activities, having personally guaranteed a loan, and so on.

Partnerships generally don’t offer limited liability protection, except in the case of limited partnerships.

A general partner has unlimited liability for the limited partnership’s debts and obligations, but a limited partner doesn’t have personal liability for their partnering obligations. To enjoy this benefit, though, limited partners have to give up the right to participate in the company’s day-to-day management.

Taxation

Put simply, there’s no difference between LLCs and partnerships when it comes to taxes.

Both business structures are considered “pass-through entities” for tax purposes, causing all income and losses from the businesses to flow through the business owner’s tax returns. In other words, the business itself doesn’t pay any income tax. Moreover, the total profit earned is subject to employment taxes and income tax.

Even for limited partnerships, the profits and losses passed through to its partners, who then report them on their individual personal tax returns and pay taxes on their share of the profits. You must note that limited partners don’t usually pay self-employment taxes on their share of the profits simply because it’s not considered “earned income” under law.

What’s interesting here is the treatment of limited liability partnership.

An LLP is considered a disregarded entity under the law. Its profits and losses are allocated among the company’s partners. LLP partners must report their portion of the company’s earnings on their personal income tax returns and then pay income tax and self-employment taxes.

5 Tools to Improve LLC and Partnership Formation

Read on as we outline the five best software services online that also offer excellent LLC and partnership solutions. You can choose any service to help you start your business.

BetterLegal

BetterLegal is the go-to option for entrepreneurs seeking a reliable business formation process and legal assistance.

It has just one formation package on offer to get the job done right off the bat. No confusing subscription plans, no upsells, and no hidden costs.

According to the business incorporation service, you’ll have your business set within two business days and receive your documents on the third day.

You also get access to a large network of lawyers and legal professionals. Technically, the company doesn’t have lawyers on its team—instead, they refer you to a reliable one using their connections.

ZenBusiness


ZenBusiness is considered one of the best online incorporation services on the market.

It offers an excellent combination of affordable rates and top-notch service. In fact, a huge majority of customer feedback supports this position, raving about how ZenBusiness provides a lot of value to their customers.

What’s more, the platform is user-friendly and has an intuitive website layout that makes navigation a breeze. A responsive and efficient customer support team is the cherry on top.

IncFile

With low subscription fees and fast and easy incorporation services, IncFile is another option you can consider to start your business.

IncFile is the only online incorporation service that doesn’t charge users to register their businesses. At the same time, it does offer premium plans that include extra features, such as employee identification number (EIN), business contract templates, and expedited business filing.

The service has a comprehensive educational resource database that can be helpful for even the smallest of businesses. Once you sign up as a customer, you can check your order status directly from your dashboard, making things convenient and easy to follow.

LegalZoom

LegalZoom is a well-renowned online legal business technology company that strives to assist clients through a wide range of legal services.

Since 2001, this incorporation service has helped over 4 million businesses and clients resolve their legal problems, most of which don’t require hiring a legal professional or law firm. It gives users access to a large community of lawyers at a surprisingly low cost for both business and personal matters.

You can expect accurate business tax advice, legal documents review from attorneys, business formation and paperwork filing, treatment registration, and more from LegalZoom.

Northwest Registered Agent

As the name suggests, NorthWest Registered Agent initially specialized in registered agent service only. But, with time, they’ve started offering fantastic business formation services, including incorporation.

In addition to being easy to use, this service has a very transparent process. You can browse ahead through the process and find out what paperwork you’ll need based on your state and what steps are left. Unsurprisingly, Northwest‘s registered agent services are one of the most comprehensive ones you’ll find on the market.

This agent will be responsible for renewing your business every year with the state and will be your main contact for all your legal documents. Furthermore, Northwest also offers a virtual office address, a customized operating agreement, and customized corporate bylaws.

3 Tricks to Help You Choose the Right Business Structure

You now know how crucial choosing the right corporate structure is for your business. To help you make the right decision, here are three incredible tips:

Consider Your Legal Liability

Think about whether you are willing to be held accountable for your business’s debts and obligations.

Limited liability companies and partnerships protect your personal assets from creditors if there’s ever a time when you cannot repay them. You won’t have this protection if you opt for a general partnership. However, if you can afford to risk that liability, setting up a general partnership could be a good option.

Consider Your Tax Implications

Think about your business goals. Then figure out which business structure would give me maximum opportunities to minimize taxation.

While corporations have more tax options when compared to partnerships and proprietorships, you also have to deal with double taxation. A good alternative is to set up an LLC and elect to be taxed as an S Corporation. This will help you avoid the double taxation issue without losing your limited liability protection.

Consider Your Future Goals

You want to get your business off the ground as soon as you can. Precisely why it’s easy to be caught up in the moment. However, if you want to survive in the long run, you need to change your viewpoint and adopt long-term thinking.

What will your business look like three or five years down the line? What will happen to the business after you die? Do you ever plan on selling your business or your share of the company? What do you want to happen when you are no longer around to run the business?

There’s no guarantee your choice of business structure will meet your requirements in the years to come, but converting companies in the future is a very time-consuming process. It’s best to talk to an expert to ensure you make the right choice.

What to Do Next

Not only a partnership and an LLC, but you should compare all the available business structures before choosing one. After all, the entity you form will affect your business success both professionally and personally.

After making a decision, focus your energy on setting things in motion with regard to formation. You can use the above incorporation tools for this—just sign up with a service, and they’ll take things from there.

Want more? Here are some more QuickSprout articles to help you run a business successfully:

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The Beginner’s Guide to S-Corp vs. C-Corp

S-Corp and C-Corp are both separate legal entities that provide limited liability to owners and have similar ownership and capital generation provisions administering them. At the same time, they also have some important differences, with each option providing unique benefits, limitations around taxation, and ownership structures.

So how do you know which corporate structure is right for your business? Let’s find out.

What are S-Corp and C-Corp?

Before diving into the differences, you have to understand what the terms S-Corp and C-Corp mean.

What’s an S-Corp?

An S-Corp, also known as the S subchapter, is a type of corporation that allows its owners to pass income, along with other deductions, losses, and credits, directly to shareholders without the compulsion to pay federal corporate taxes.

Having an S-Corp status gives small businesses (100 or fewer shareholders) the regular benefits of incorporation while enjoying the tax-exempt privileges of a partnership business. It’s a federal tax status and not a legal business entity. Therefore, limited liability companies, limited liability partnerships, and traditional corporations may elect S Corporation status.

What’s a C-Corp?

A C-Corp is a legal structure for a company authorized by the state to transact business.

As the business is treated as a separate body from its owners, it has its own assets, liabilities, obligations, and rights and must pay corporate income taxes on profits. Owners receiving distributed profits will also have to pay taxes as personal income.

The taxing of profits from the business at both corporate and personal levels creates an interesting double taxation situation. This may sound unfavorable, but it really isn’t. C-Corps limit investor and owner liability, so if the business fails they are only out the amount of their investment.

The Basics of S-Corp vs. C-Corp

In this section, I’ll help you gain a better understanding of the differences and similarities between an S-Corp and a C-Corp, and how they impact your business’s bottom line.

Formation

How an S-Corp and C-Corp are formed is the most basic difference between the two.

In the case of C-Corp, the formation is by default. All you have to do is file articles of incorporation with your secretary of state to register your business as a corporation, and your company becomes a standard C-Corp.

However, to structure your company as an S-Corp, you must file IRS Form 2553 for federal tax purposes. You may also have to file additional papers at the state level to be treated as an S-Corp for state taxes.

Taxation

C-Corps are a separate legal entity and subject to double-taxation. Under this, every business is charged corporate income tax for the profits after which its shareholders have to pay personal income tax on the profit earned in the form of dividends.

Additionally, C Corporations can reduce their tax burden by deducting certain fringe benefits for employee welfare, such as life insurance and healthcare. This isn’t the case with S-Corps.

While S-Corps aren’t charged at the corporate level, business owners must pay personal income tax for the accrued gains attributed to them, similar to a sole proprietorship or a partnership model.

The cost of offering fringe benefits to employers, however, isn’t deductible. Instead, it’s added to the taxable income of all shareholders holding more than 2% of the stock.

Here’s an illustration of how this difference in taxation works:

Suppose you have a C-Corp with a taxable income of $100,000 (Total business revenue – Total deductible expenses).

First, you have to pay the 21% corporate income tax rate, amounting to $21,000. After deducting that, you’re left with $79,000. Assuming you take all that money as dividends, you also need to pay a 15% dividend tax ($11,850), which will make your tax bill amount to $32,850 ($21,000 + $11,850). But if you spent $25,000 on employee benefits, you could deduct that from the original $100,000 before taxes kicked in, thus reducing your tax burden by approximately 25%.

Contrarily, having an S-Corp with a taxable income of $100,000 will involve you filing a personal income tax return on the entire amount. As the current personal income tax rate is 24% for people earning between $86,376 and $164,925, your total tax bill would be $18,289.50. Your $25,000 in employee benefits could not be deducted, though other business expenses could be.

Ownership

C-Corps have the flexibility to list an unlimited number of shareholders, whose rights may be divided to enable implementing the different profit-sharing structures. It’s why this corporate structure is great for companies wanting to raise capital through IPOs (Initial Public Offering).

S-Corps cannot have more than 100 shareholders, with each holding equal voting rights since only one class of stock is permitted for distribution. All individuals must hold a U.S. passport or be an American resident to become a shareholder as well.

This makes artificial entities, such as trusts and other corporations, ineligible for ownership in such a company.

Scale of Operations

C-Corps tend to be large organizations–they have to be, to afford double taxation and still be profitable. Since smaller or new firms are likely to operate on losses for the first few years, the double taxation effect of C-Corp isn’t feasible for them.

Opting for an S structure would be more advantageous here as it allows owners to offset their income from other sources using the aforementioned losses, which, in turn, reduces their overall tax liability. Moreover, a few states don’t recognize S status and converted companies, even when recognized under federal laws, making them taxable under the C status structure.

Be sure to consider your regional legislation before alternating between business structures.

Corporation Similarities

There aren’t only differences; S-Corps and C-Corps share multiple similarities too. Let’s check them out.

  • Incorporation: You must follow the necessary steps for corporate formation, regardless of whether you structure your company as an S-Corp or C-Corp. This includes completing the proper incorporation documents, filing incorporation articles, appointing a registered agent, and creating corporate bylaws.
  • Limited Liability Protection: Having an S status or a C status makes corporations a legally separate entity from the owners and gives shareholders limited liability protection. In other words, they are not personally liable for the business’s debts or other obligations.
  • Compliance: S-Corps and C-Corps should meet certain documentation and compliance obligations, including issuing stock, paying fees, and holding shareholder and director meetings.
  • Corporation Structure: S-Corp or C-Corp shareholders don’t make all the company-related decisions. Management and policy issues are taken care of by the board of directors, elected by the shareholders. Whereas corporation officers—CEO, COO, and CTO—handle the daily activities of running the business.

5 Tools to Improve S-Corp or C-Corp Incorporation

Whether you decide on a C-Corp or S-Corp, you can use online incorporation services to form a corporation without any hassle. Below are the five best feature-rich tools on the market.

LegalZoom

One of the most popular LLC services, LegalZoom also offers top-notch facilities for S-Corps and C-Corps, complete with comprehensive legal assistance in all 50 states.

This service goes beyond the basics of business formation and comes with a wide range of services. It has a user-friendly platform and great customer service. But what works best for me is that LegalZoom directly pairs you with attorneys to provide you with personalized advice.

Access to educational resources designed to answer common questions asked by business owners is another plus.

Rocket Lawyer

Another option offering comprehensive legal services, Rocket Lawyer includes actual attorneys among its staff to answer all your legal queries.

You get ongoing attorney services as a part of its monthly membership plan, where you can call or message any Rocket Lawyer attorney at any time during the business incorporation process for advice. Although the website can use a revamp, it has a fairly straightforward and easy business entity registration process.

What’s more, throughout the business formation process, the service provides you a link with pop-up boxes to facilitate decision-making. For instance, when you ask a question about a corporation’s management and ownership, Rocket Lawyer will show you a statistic about what percent of other Rocket Lawyer customers choose for their business and how you could benefit from choosing that option.

Northwest

Northwest cuts out any fluff during the incorporation process and aims to give complete privacy, transparency, and great customer service.

It primarily focuses on a core selection of services, such as business formation, registered agent services, and ongoing compliance. Northwest is also the only major nationwide registered agent service that scans every document they receive as your agent.

Signing up for a Northwest service will get you paired with a Corporate Guide, who will be an expert in your state’s rules. They will guide you throughout the incorporation process and be your personal customer support agent.

ZenBusiness


ZenBusiness’s clean and easy-to-use interface, which, when combined with its highly efficient customer service, makes it one of the best incorporation services on the market.

What sets ZenBusiness apart from rival incorporation services is its worry-free guarantee that includes two amendments to yearly corporate annual reports—something that’s sure to give you peace of mind.

Let’s not forget its highly competitive $39-price point and a free year of registered agent service and accounting assessment along with your incorporation. Therefore, not only are your ZenBusiness packages fully featured but also incredibly pocket-friendly.

Incfile

Incfile offers several useful features to help you kickstart your business.

Similar to ZenBusiness, you get a whole year of the registered agent service in every Incfile package free, which costs only $119 annually after that. Its premium plans come with extra features, like a federal tax ID number (EIN), corporate bylaws, meeting minutes, a banking resolution, and a personalized binder.

Plus, Incfile has several positive customer reviews raving about its prompt customer service and how they do a fantastic job at helping you form your dream business.

4 Tricks to Decide Between Becoming An S-Corp vs. A C-Corp

We’ve covered the basics of S-Corp and C-Corp, their similarities and differences, and tools that help you start your business. But how do you decide which corporate structure is best for your small business? Start by asking yourself the following questions:

Do you plan on selling your company down the line?

If you do, you might want to become a C-Corp.

Having the ability to be owned by other types of companies, C Corporations make much easier acquisitions in the long run. Additionally, you can have as many owners as you like, along with different classes of shareholders.

Do you want to limit your shareholders?

If yes, you should opt for an S-Corp.

S-Corps are limited to 100 shareholders and emphasize shareholder input—something that can be useful for small businesses wanting to stick to a smaller setup. Nonetheless, if you think your company could expand exponentially later, file yourself as a C-Corp.

Are you okay being under constant scrutiny?

If not, a C-Corp would be a great option for you.

All corporations have C-Corp as the default filing. Becoming an S-Corp, on the other hand, involves an extra layer of paperwork, which you must be prepared for if that’s your choice. Moreover, you have to ensure a spotless record at all times, as even a single mistake can cost you your S Corporation status.

Consider filing as a C-Corp if the extra scrutiny from the IRS seems too much to handle.

Does double taxation seem worth it to you?

You already know the answer to this one—C-Corp!

If you’re comfortable getting taxed at the corporate level and then again at the personal level, you can consider becoming a C-Corp. But if you want to save on corporate taxes and handle profit and losses to your personal income, incorporating as an S-Corp is the better choice.

What to Do Next

Once you decide the better fit between S-Corp vs. C-Corp, you can use the above incorporation service tools to get the ball rolling.

These services are designed to take care of everything related to your business and make the process as seamless as possible. Be sure you choose an option that offers you round-the-clock customer service, competitive pricing, and accurate legal advice. If you are interested in looking more into LLC services instead, check out our guide on the best LLC services.

Here are a few additional QuickSprout guides to help you make the right decision:

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How to Dissolve a Corporation

Regardless of the reason, there sometimes comes a point when some corporations decide to call it quits.

But simply halting your business operations isn’t enough to actually end the corporation’s existence.

The corporation will continue existing as a legal business entity until you’ve formally dissolved the company.

Once you’ve legally dissolved the corporation, you can walk away knowing that everything has been settled correctly and start your next venture without any hindrance.

This guide will walk you through the step-by-step process of dissolving a corporation.

The Easy Parts of Dissolving a Corporation

Many business owners are intimidated by the dissolution process because they think it’s something they need to do alone. This simply isn’t the case.

To keep things simple and put your mind at ease, it’s recommended that you seek legal counsel. Retaining an attorney might seem like a big expense, especially if times are tough and you’re going out of business. But there are plenty of affordable online legal services you can use as you go through this process.

Do not go through the dissolution process without an attorney. You could end up with the raw end of the deal and leave yourself exposed to problems down the road.

With an online legal service like Rocket Lawyer, you can get fast answers to your legal questions regarding the dissolution process.

A Rocket Lawyer membership starts at just $39.99 per month. Members get legal questions answered at no cost and free 30-minute consultations for every new legal matter. If you hire an attorney through Rocket Lawyer, your membership gets you up to 40% off.

One of the most critical steps of dissolving a corporation involves filing paperwork with the Secretary of State. We’ll discuss this step in greater detail later on.

But this is another easy part of the dissolution process. The paperwork is easy to obtain, and in many cases, you can file everything online.

The Difficult Parts of Dissolving a Corporation

The psychological aspects of dissolving a corporation pose a big challenge for lots of business owners.

Deciding to end your company is hard enough. Many people struggle to go through the extra steps to formally dissolve the business once they’ve mentally checked out. They’ve already decided to walk away and don’t want to put in any extra work. They just want to put it behind them and move forward.

But the problem here is that the state and IRS will still recognize the corporation as a legal business entity. This means that you’re still responsible for taxes and subject to other legal requirements. Creditors and vendors can still come after you as well.

Another challenge of dissolving a corporation exists when board members aren’t on the same page. The corporation must go through a formal voting process on the dissolution, which could turn ugly if everyone doesn’t see eye-to-eye on the decision.

The entire process from start to finish can take weeks or potentially months to complete. You can’t wake up one morning, decide to end the business, and have it done before dinner.

Going through this lengthy process and taking several steps to formally dissolve a corporation can be frustrating, but it is worth it to dissolve the business legally.

Step 1 – Call a Board Meeting

The first thing you need to do is call a meeting with the board of directors for your corporation. Laws vary by state, but most states require an official vote from board members to approve the dissolution decision.

Even if this is not required in your state, it’s still wise to go through this process as a way to avoid legal blowback down the road.

For the vast majority of corporations, the corporate bylaws will require board approval for a decision like this.

Like any other board meeting, everything must be formally recorded with meeting minutes and kept with the corporation’s records. Remember, you’re still a legal business entity until the dissolution has been made official. So you can’t cut any corners here.

Assuming the board approves the decision, you must then turn over the vote to shareholders for approval.

Shareholder Votes

Shareholder approval laws vary from state to state. In some jurisdictions, there is a two-thirds vote requirement from shareholders to approve the dissolution. Other states just require a majority rule.

Refer to your local laws and corporate bylaws to ensure everyone understands the requirements before votes are cast.

In some instances, the shareholder voting process will be much easier than in others. For smaller corporations, the board of directors might be the same people who hold primary shares in the company. But for larger corporations with lots of shareholders, the process might take a bit longer.

Shareholders need to understand that the dissolution is in their best interest. If this isn’t clear, getting a majority vote could be challenging.

Step 2 – File a Certificate of Dissolution

Once the board of directors and shareholders have voted to approve the dissolution, you can officially file the proper forms with the Secretary of State where the business is incorporated.

It should be pretty easy to obtain this paperwork. The exact name of the government agency in your state might vary slightly. Some states have a Corporation Agency while others call it a Corporation Commission or Incorporation Bureau—but they all do the same thing.

The name of the paperwork can vary as well. Sometimes the certificate of dissolution is also called the articles of dissolution.

Verify all of the fees and filing requirements before you submit the form. Depending on the state, you might be able to file by mail, online, or in person.

This is another scenario when it’s helpful to have fast legal counsel available to answer your questions. You can quickly go online and contact an attorney with Rocket Lawyer to ensure you’re handling this step correctly and following local guidelines.

Again, quick questions are free with your Rocket Lawyer membership.

In some jurisdictions, tax clearance is required before you can file the certificate of dissolution. So if your corporation owes back taxes, they must be paid before you can submit the paperwork.

Notifying creditors and resolving claims is also required in some states before you can file the dissolution papers. That’s why having an attorney guide you through this process is so helpful since the laws vary by location.

Step 3 – Notify the IRS

Once you’ve filed the dissolution forms with the state, you need to contact the Internal Revenue Service and inform them of your decision.

Ending your business doesn’t absolve you of tax liabilities. If you’ve been conducting business throughout the year, you still need to pay all of your state and federal taxes. For S corporations, the corporate income, losses, deductions, and credit can be passed through to shareholders’ individual returns.

For more information on the exact forms to file and the process required by the IRS, review this IRS resource for closing a corporation. Here’s a brief overview and summary of those requirements:

Income Tax Returns

C corps must file Form 1120 and report capital gains and losses on Schedule D (1120). S corps must file Form 1120-S and report gains and losses on Schedule D (1120-S).

When filing, you need to check the box that says “final return” for the tax year in which the corporation was dissolved.

If you’re liquidating stock, you must also file Form 966 for corporate dissolution or liquidation.

Along with forms 1120 or 1120-S, corporations need to file Form 4797 and Form 8594. These are necessary if the company’s property is sold or exchanged or if the business itself is sold.

Employment Taxes

If your corporation has employees, you need to make all final federal tax deposits. Failure to do so can result in penalties. Officers, employees, accountants, and anyone else who has the authority to spend business funds can be held responsible for unpaid employment taxes.

Form 941 must be filed for the quarter in which final wages were paid. Form 944 must be filed for the year in which final wages were paid.

You’ll also need to file Form 940 for FUTA in the year where final employment wages were paid. Check the box identifying that the form is final.

Just because your business is dissolving doesn’t exempt you from providing W-2s to your employees. So you’ll still need to file those papers for all wages paid to date in the year your corporation was dissolved.

If your company pays freelancers or contract workers, you still need to provide 1099s to any contract worker paid $600 or more during that calendar year.

Employer Identification Number (EIN)

When you first started the corporation, you obtained an EIN from the IRS. It’s a common misconception that EINs are terminated when a company dissolves—that’s not the case.

The EIN assigned to your business is permanent. This will never be given to another company, and you can use it at a later date if need be.

But you still need to close the tax account associated with your EIN. Mail a letter to:

Internal Revenue Service
Cincinnati, Ohio 45999

The letter should contain the corporation’s legal name, EIN, address, and why you’re closing the account. If you have a copy of the form sent when you first received the EIN, include that as well.

Step 4 – Close Your Accounts

Next, you need to close all of your business bank accounts and credit lines.

You should also cancel any business licenses, permits, or other similar accounts held in your company’s name. Failure to do this could leave you on the hook for annual fees.

For those of you operating your corporation in multiple states, you need to fill out any additional forms to terminate those registrations. Otherwise, your company could be responsible for minimum tax requirements in those jurisdictions.

Terminate DBAs or fictitious business names that you’re using as well.

Notify Creditors

You’ll need to officially notify all creditors that the corporation is dissolving. Send a letter including a mailing address that they can submit claims. Include a deadline for claim submissions—usually 120 days from the notice date.

Each letter to creditors should include a final statement saying all claims will be barred if they aren’t received by the deadline. You can have your attorney draft this statement for you to ensure you’re covered from a legal standpoint.

In some states, you might be required to put a notice in the local paper about your corporation dissolving. This is to inform all creditors that may not be known to the business.

Settle Claims

If claims are sent during the time window stated in the letter, you need to settle those accounts. This is another instance where you should have an attorney review any claims to ensure creditors aren’t taking advantage of you.

Lots of times, creditors just want to be paid something—so you can potentially settle the claims for less than the original value.

If you’re rejecting claims, provide these rejections in the form of a written statement drafted by your lawyer.

Keep future business ventures in mind as you’re going through this process. You might be starting a new corporation down the road, so try not to burn any bridges during the dissolution.

Step 5 – Distribute Remaining Assets

Once your taxes have been paid, accounts have been closed, and claims are settled, it’s time to distribute the remaining assets to all owners.

Generally speaking, assets will be distributed by ownership percentage. If there are four equal owners, each person will receive 25% of the assets.

It’s usually easier to distribute assets once things have been liquidated. For example, if you have machinery or vehicles, splitting those between owners can be a hassle. The liquidation process could take some time, depending on what needs to be sold.

You must report all distributions to the Internal Revenue Service.

For those of you dissolving a corporation with multiple stock classes, the corporate bylaws should describe the procedure for distributing assets to shareholders.

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Rocket Lawyer Review

Rocket Lawyer is one of the most popular and reputable online legal services in the U.S.

The platform is best known for its extensive library of legal documents, forms, and contract templates. It’s a quick, easy, and affordable way for anyone to get legal advice from qualified attorneys.

Rocket Lawyer also provides business formation services for LLCs, C-corps, S-corps, and nonprofits in all 50 states.

Since launching in 2008, more than 20 million people have used Rocket Lawyer’s legal services. Is Rocket Lawyer right for you and your business? Continue reading to find out.

Sign up for Rocket Lawyer today.

Rocket Lawyer Business Formation Services

Rocket Lawyer offers a wide range of services for individuals and businesses alike. From estate planning to lease agreements and divorce settlements, they have legal documents and attorney services for basically any category you can think of.

For the purposes of this guide, we’re going to focus on the business formation services offered by Rocket Lawyer. These formation services can be segmented into three main categories—LLC services, incorporation services, and registered agent services.

We’ll take a closer look at each one to help you determine if Rocket Lawyer is right for you.

Rocket Lawyer LLC Services

If you’re starting an LLC and want to avoid the hefty costs associated with hiring a traditional lawyer, Rocket Lawyer is a cost-effective alternative.

Getting started is easy. Just answer a handful of simple questions about your business, and Rocket Lawyer will handle all of the paperwork for you. They’ll also take care of the LLC filing on your behalf.

Once the process is complete, you’ll be able to access the LLC documents from your Rocket Lawyer account. Hard copies will be sent to you as well.

Another benefit of using Rocket Lawyer to form your LLC is the expertise included with your service. Rocket Laywer’s LLC specialists have worked with thousands of businesses, so they’ve seen it all. If you have questions or need some extra assistance during the process, those experts are just a phone call away.

Answering the questions and completing your order online takes just a few minutes.

Choose your state of formation, pick a company name, provide basic contact information, and fill in a few other simple form fields. During this process, you’ll have the opportunity to rush your order if you need to form the LLC ASAP. Rush filing fees and processing times vary from state to state.

You can also use Rocket Lawyer to get your tax ID number (EIN). You’ll need to have one, so it makes sense just to get it now. The EIN add-on costs $59.99.

Rocket Lawyer hits you with a few upsells during the order process for your LLC. You can skip most of these. They also offer registered agent services for $149.99 per year ($111.99 with the membership discount). We’ll cover these services in greater detail shortly, but this is definitely something you’ll want to add.

The LLC formation service costs $99.99 + state fees. But you can get it for free when you sign up for a Rocket Lawyer’s premium membership.

Take a look at this sample checkout page for an LLC in Washington:

As you can see, the membership discounts will automatically be applied to your order when you sign up. The $99.99 is deducted, and the registered agent service is discounted as well.

Most people go with the membership option. It comes with other perks and legal services your business will need after the LLC is officially formed. For example, you can ask lawyers free legal questions and get free 30 minute consultations on new legal matters. These services usually start at $49.99 per question and $59.99 per consultation, so the membership offers a tremendous value to business owners.

Rocket Lawyer should be a top consideration for anyone who wants a fast and affordable way to form an LLC online at the end of the day.

Rocket Lawyer Incorporation Services

In addition to LLCs, you can also use Rocket Lawyer to form an S corporation, C corporation, or nonprofit corporation.

The incorporation services are nearly identical to the LLC services. You’ll answer a few simple questions about your business to get started. The questions will look slightly different for corporations, but it’s still the same general information.

You’ll also have access to the incorporation experts at Rocket Lawyer if you have questions or need some extra help during the signup process. It’s normal to need guidance, especially if you’ve never done this before. Don’t be afraid to take advantage of their expertise.

Rocket Lawyer will help you get organized with the financial aspect of your new corporation as well. You can provide the initial number of stocks you want to issue and those stocks’ initial values. You’ll then add information about your corporation’s shareholders, including their equity percentage and personal details. Rocket Lawyer will use that information accordingly on your incorporation documents.

You can include information about additional directors of the corporation during the order process, too.

Rocket Lawyer can also handle your S-corp election form while filing your documents. This extra incorporation service costs $69. The fee is definitely worth the convenience if you want to be taxed as an S corporation.

If you want your incorporation documents filed immediately, you have to pay extra to expedite the process. The exact fee and processing times will vary depending on your state of formation.

For example, California’s standard processing time is 5-7 business days ($120). But you can expedite the order for 1-2 business days and pay $560. Is it really worth more than 4.5x the standard fee? That’s for you to decide.

You can add an EIN (tax ID) to your order for $59.99. Getting this on your own directly from the IRS is free, but it is easier to just have Rocket Lawyer do it for you and get everything in one place.

Rocket Lawyer also offers a customized “corporate kit” for new corporations. For $99, you’ll get:

  • Stock certificates
  • Custom embossed binder with corporation name and matching clip case
  • Custom corporate seal
  • Sample business forms

This is a “nice-to-have” item but not a requirement to incorporate.

The final step of the process is deciding whether to use Rocket Lawyer as your registered agent. This additional service costs $149.99 per year ($111.99 for members).

Again, you can avoid the $99 incorporation service fee by signing up for a Rocket Lawyer premium membership.

Between the quick setup, low cost, and ongoing benefits, Rocket Lawyer’s incorporation services should definitely be considered if you’re ready to incorporate.

Rocket Lawyer Registered Agent Services

Rocket Lawyer provides registered agent services in all 50 states. If you’re using them to form an LLC or corporation, adding this service is a no-brainer.

Your business needs a registered agent, and this is definitely something you don’t want to do on your own.

Here’s a brief explanation of what is included as part of these services:

  • Keep your personal information private (the RA will be used for public records)
  • Official point of contact for legal and tax notifications
  • Online access to legal notices
  • Fast email notifications
  • Acceptance and notice for any service of process
  • Compliance ensured

The service costs $149.99 per year. You can get it for the discounted rate of $111.99 with a Rocket Lawyer premium membership.

If you’re using Rocket Lawyer to form your business, I strongly recommend using the Registered Agent service as well.

Overall Pricing and Value

Rocket Lawyer’s pricing structure is a bit unique compared to other similar services on the market today. In addition to the standalone services, they offer a premium membership, where members have access to discounts and freebies.

Let’s take a closer look at what premier members get for $39.99 per month:

  • Free business formation (for new members, 25% off thereafter)
  • 25% off registered agent services (normally $149.99)
  • Free legal documents (normally $39.99 per document)
  • Free document defense (normally $9.99 per document)
  • Free legal questions (normally $49.99 per question)
  • Free 30 minute legal consultations (normally $59.99 per consultation)
  • Up to 40% off Rocket Lawyer on-call attorneys

The membership is also free to try for seven days.

In short, you can get the business formation cost waived (excluding state fees) when you sign up for Rocket Lawyer Premium. If you’re planning on using any additional services after your initial business formation, the membership cost pays for itself pretty quickly, especially for legal documents and consultations.

But if you just want to use Rocket Lawyer for the business formation package and never plan on using the other services, you probably don’t need the membership.

User Experience

Using Rocket Lawyer to form your business is incredibly straightforward. I went through the process several times for different entity types, states, and scenarios. It never took more than five minutes to answer the questions.

Once you complete the signup forms, just sit back and relax while Rocket Lawyer handles the rest.

All of your LLC or incorporation documents will be available online for you to access and download. Rocket Lawyer will also send you a hard copy of those documents in the mail.

Creating legal documents using the templates provided by Rocket Lawyer is a breeze, too. They have contracts and documents for everything, which is extremely useful for any business owner.

They also recently came out with a new feature, RocketSign, that offers electronic signatures on documents from anywhere.

The electronic signature capabilities won’t make or break your decision to use Rocket Lawyer for business formation, but these extra perks definitely add value if you’re on the fence.

Customer Support

Rocket Lawyer’s support team is exceptional. I love the fact that you can call them if you need help during the signup process or at any other point.

It’s common for new business owners to have questions as they are forming an LLC or incorporating. The experts at Rocket Lawyer can put your mind at ease.

Representatives are available via phone or live chat from 6 am to 6 pm, Monday through Friday.

With a Rocket Lawyer membership, you’ll also get free 30-minute legal attorney consultations for every new legal matter. If you just have a quick legal question, you can ask a Rocket Lawyer attorney for free as well.

Final Verdict

Do we recommend Rocket Lawyer? Absolutely.

It’s an excellent option for anyone that wants to form an LLC or corporation. They also provide registered agent services, legal documents, attorney consultations, electronic signature capabilities, and tons of other useful online legal services.

Rocket Lawyer’s reputation and reliability speak for itself with 12+ years of experience, and more than 20 million clients served.

You can quickly and easily become a Rocket Lawyer premium member to form your business for free and benefit from great discounts on other services.

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How to Get an EIN: The Complete Guide

Most businesses need an EIN to operate. If you’re starting a new business, getting an EIN should be at the top of your to-do list.

Think of an EIN like a social security number—but for your business.

You need a social security number to rent or buy a house, get a job, and open a personal bank account. EINs are just like that. You won’t be able to hire employees, form certain entities, or open a business checking account without an EIN.

Fortunately, getting an EIN is relatively simple. There are several different ways to do it, and you can even get an EIN for free.

Not sure if you need an EIN? Don’t know how to get one? You’ve come to the right place. This guide will walk you through everything you need to know about getting an EIN for your business.

What is an EIN?

The acronym stands for “employer identification number” and is a type of taxpayer identification number (TIN). EINs get issued by the IRS to business entities like LLCs and corporations.

The primary purpose of these unique nine-digit numbers is for tax reporting. But most banks, credit card companies, and vendors will require your business to have an EIN before allowing you to open an account or working with you.

People often confuse EINs and social security numbers (SSNs) with each other, as they are both nine-digit government-issued identification numbers. But the formatting for an EIN is different from an SSN. EINs start with two digits, followed by a hyphen and then seven more (12-3456789). SSNs follow a three-two-four digit sequence, separated by two hyphens (123-45-6789).

EINs are often referred to by many different names. Here are some common synonyms for EIN that you’ll see in different contexts:

  • EIN
  • Tax ID number
  • Federal tax number
  • Federal tax ID
  • Federal employer identification number
  • Employer ID number

If you see any of these terms on a form, just know that they all refer to an EIN.

Does Your Business Need an EIN?

According to the IRS, this is the general criteria used to determine if a business needs to have an EIN:

  • Does the business have employees?
  • Does the business operate as a partnership or corporation?
  • Does the business file tax returns for employment, excise, or alcohol/tobacco/firearms?
  • Does the business withhold taxes (other than wages) paid to non-resident aliens?
  • Does the business have a Keogh plan?
  • Is the business involved with certain trusts, IRAs, Exempt Organization Business Income Tax Returns, estates, real estate mortgage investment conduits, nonprofit organizations, farmers’ cooperatives, or plan administrators?

If you answer “yes” to any of these questions, the IRS says you need to have an EIN. However, it is important to note that a business of any size, even a single-member LLC, can get an EIN.

Let’s take this one step further and look at the EIN requirements for different entity types. Keep in mind, just because you’re not required to get an EIN doesn’t mean you shouldn’t.

Sole Proprietorships

Sole proprietorships without employees are not required to obtain an EIN if they answer “no” to all of the other criteria listed above. Any sole proprietor with employees is required to get an EIN.

In many cases, sole proprietors will still need an EIN to open a bank account or do other business-related tasks (even though the IRS doesn’t require it). Without an EIN, sole proprietors are forced to use their personal SSN on 1099 forms and other business documentation, which ultimately exposes your risk to identity theft.

Single-Member LLCs

Single-member LLCs without employees are not required to get an EIN. Again, this is under the assumption that the LLC does not meet any other IRS criteria (such as excise tax, Keogh plans, etc.). Any single-member LLC with employees is required to obtain an EIN.

Similar to sole proprietorships, it’s still recommended that you get an EIN for your single-member LLC, even though the IRS does not technically mandate it.

Partnerships and Multi-Member LLCs

If your business is structured as a partnership or multi-member LLC, you are required to obtain an EIN.

You’ll have to file a partnership return and provide K-1 tax forms to all members of the LLC. You must have an EIN for this type of reporting and entity structure.

Corporations

The term “corporation” can refer to several different entity types.  The most common entity types are S corporations, C corporations, and nonprofits, all of which are required by the IRS to have an EIN for tax purposes.

In short, if you are incorporating your business, you need an EIN.

Trusts and Estates

In some instances, EINs are used for certain types of trusts and estates. But for the purposes of this guide, we’ll stick to diving into EINs for businesses only.

Reasons to Get an EIN For Your Business

Aside from the government mandates, there are other reasons why you should get an EIN. So, for those of you who fall into the “not required” categories, here are some other scenarios where an EIN might be necessary:

  • Opening a business banking account (most banks will require an EIN)
  • Building business credit to qualify for loans
  • Protecting you from identity theft (instead of using your SSN for business purposes)
  • Applying for a business credit card
  • Applying for a business line of credit
  • Applying for certain business licenses
  • 1099 forms (instead of SSN)
  • Establishing credibility as a freelancer or independent contractor
  • Establishing trust with new vendors
  • Avoiding tax penalties
  • Having more options for retirement plans

As you can see, EINs go far beyond tax requirements. Remember when we said that a single-member LLC is not always required to have an EIN? Take a look at this business checking application from US Bank:

In this case, you wouldn’t be able to open a business bank account without an EIN. This means you can’t separate your personal expenses from business expenses, which may lead to a completely new set of problems down the road.

Getting an EIN from the beginning (even if you don’t actually need one) can also help your business grow in the future.

For example, let’s say you’re currently a sole proprietor and handle all business operations on your own. But you start to get more work and need to hire an employee. You won’t be able to legally hire anyone until you obtain an EIN. Rather than waiting and potentially encountering delays in the process, it’s better to be proactive and get an EIN while you’re setting up your business entity. This way, you’ll be able to hire people when you’re ready without having to take extra steps.

EIN Eligibility and Requirements

Now that you understand who needs an EIN, what they’re for, and why you need one, there’s one more thing to know before you apply. Just because you need an EIN doesn’t necessarily mean that you’re eligible to get one (but most people are).

According to the IRS, these are the eligibility requirements for obtaining an EIN:

  • Your business is located in the US or within a US territory
  • The applicant must have a valid taxpayer identification number (usually their social security number)
  • Each responsible party is limited to one EIN per day

A “responsible party” is defined as the person who owns or controls the entity (a natural person, not an entity).

How to Get a Free EIN (Employer Identification Number)

Applying for an EIN is easy. You can apply directly with the IRS to get a free EIN, using one of the following methods:

  • Online
  • By fax
  • By mail
  • By phone (international applicants)

Apply Online

Applying online will be the best option for the vast majority of people. Click here for the application link on the IRS website. It’s free, and it won’t take up too much of your time.

The IRS requires that you complete the application in one sitting. So, you can’t start, save your progress, and then finish at a later time. Your session automatically expires after 15 minutes of inactivity. If this happens, you’ll need to start over.

I like the online application because it’s so straightforward. You just have to provide some basic details about your business, including:

  • Legal structure (sole proprietor, partnership, LLC, corporation, etc.)
  • Member information
  • State or territory where the business is physically located
  • Reason for applying (to hire employees, banking purposes, new business, etc.)
  • Information about the “responsible party” (you, in most cases)

You can apply online during business hours from 7 a.m. – 10 p.m. EST, Monday through Friday.

You’ll receive your EIN immediately after the application has been verified, and can use it to open a bank account or apply for a business license right away. However, it takes up to two weeks for the EIN to become an official part of the IRS’s records. You won’t be able to file an electronic tax return or make an electronic tax payment until it is in their official records.

Apply by Fax

For those of you who can’t or don’t want to apply online, you have the option to send your application via fax. You’ll need to print and complete IRS Form SS-4.

This form is available online and there are no time constraints for when you can send the fax (unlike the online form).

Make sure you read the form carefully. If you answer something incorrectly or make a typo or error, it can cause significant delays in the process. Error-free forms generally take about four business days to process.

If you’re located in one of the 50 states or Washington DC, send the fax to 855-641-6935. For those of you without a legal residence, principal office, or principal agency within the US states, fax Form SS-4 to 855-215-1627 (within the US) or 304-707-9471 (outside the US).

Apply by Mail

A mailed application will take the longest to process. But if you’re not in a rush, you can print and complete Form SS-4 and send it to the following address:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

The mailing address remains the same regardless of your physical location. However, if you don’t have a legal residence or a principal address in the US, change the attention line to “Attn: EIN International Operation” instead.

Apply by Phone

If you’re applying for an EIN and your business is located outside of the US, you cannot apply online. You must call the IRS directly to obtain an EIN as an international applicant.

This option is ONLY available to international applicants. The IRS does not take phone applications for businesses physically residing in the US anymore.

To apply for an EIN by phone, call 267-941-1099 between 6 a.m. and 11 p.m., Monday through Friday (the number is not toll-free).

Alternative Ways to Get an EIN

For those of you launching a new business, you have another option for obtaining an EIN.

In order to officially start your business, you need to file the appropriate documents with your state, name a registered agent, and go through some additional formalities. Many people choose to use a business formation service for this. These online services will handle all of the appropriate filings on your behalf, regardless of your entity type.

While signing up for a business formation service, you can easily add an EIN filing option to your plan. The provider will obtain one from the IRS on your behalf using the same information you’re providing to form your LLC or corporation.

There’s usually an added, one-time fee for this service, but you’re paying for convenience. It’s as simple as checking a box and letting a third-party handle the rest for you.

Here’s an example from Inc Authority (a popular business formation service):

Adding an EIN to your order will look a little different, depending on the formation service you use. But everyone offers one, and it’s easy to select when you’re signing up. Some business formation service plans will even include an EIN in your package.

How Much Does an EIN Cost?

Applying for an EIN is 100% free—as long as you apply directly through the IRS. The four methods discussed earlier in this guide (online, fax, mail, phone) are all free for anyone.

If you use a third-party service, there’s usually a charge on top of the business formation base cost. Here’s a list of EIN prices from the best business formation services on the market today:

These are the current base rates for obtaining an EIN from those providers. In some cases, EINs will come included in certain formation plans or premium packages.

Conclusion

Employer identification numbers (EINs) are required for many businesses to operate. Even if your particular business isn’t required by law to obtain an EIN, it’s still in your best interest to get one.

How do you get an EIN? It’s easy—just follow the instructions in this guide.

Getting an EIN from the IRS is free and easy. But if you don’t want to deal with the IRS, you can always use a business formation service and let them handle the application on your behalf.

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IncFile Review

Incfile is one of the most popular business formation services on the web. It’s a fast and easy way for anyone to start a business without the hassle and costs associated with hiring an attorney.

Over half a million businesses have launched with Incfile since 2004.

As a pioneer in the business formation industry, Incfile uses modern technology and provides exceptional customer service to entrepreneurs who need assistance in registering a new business.

This service provider is best known for its rock-bottom prices. In fact, you use Incfile to form your business for free (more on that later).

Not sure if Incfile is right for you? Fortunately, you’ve come to the right place. We’ll break down the service offerings, prices, packages, and everything else you need to know before making a decision. You’ll even learn more about what real customers are saying about Incfile.

Ready to get started? Sign up with Incfile today.

Incfile Business Formation Services

Incfile’s business formation services can be segmented into three main categories—LLC services, incorporation services, and registered agent services. We’ll cover each of these in greater detail below.

Incfile LLC Services

When it comes to forming a limited liability company (LLC) with Incfile, simplicity is the first thing that comes to mind. In just a handful of simple steps, they walk you through the entire process online.

Whether you’re looking for just the basics to get you started or a customized LLC kit, Incfile has you covered.

Every LLC package from Incfile comes with the following:

  • Unlimited company name availability searches
  • Articles preparation and filing
  • Next-business-day processing
  • Registered agent services (free for one year)

You can get all of these services from Incfile for free at the lowest pricing plan; just pay the state fees. This simple and inexpensive setup is why so many entrepreneurs turn to Incfile for LLC formation services.

 

There are three LLC packages for you to choose from:

  • Silver — $0 + state fee
  • Gold — $149 + state fee
  • Platinum — $299 + state fee

If you’re on a tight budget and just want the basic services from the bullet list above, you can get that Silver package without paying a dime to Incfile. As previously mentioned, this even comes with a free year of registered agent services.

With that said, the Silver package doesn’t come with an employer identification/tax ID (EIN). This is definitely something you’ll need, so it makes sense to get it directly from Incfile. You can add that to your Silver package for $70.

Alternatively, the Gold plan comes with several additional premium services. This includes an EIN, preparation and filing of IRS form 2553, an operating agreement, banking resolution, express shipping, and a business formation kit.

The Platinum package comes with added perks like business contract templates, free domain name, email service, expedited filing, and a better version of the business formation kit.

Not all of the Platinum features are really necessary, especially the free domain and email service. These are things you should be getting elsewhere.

The state fee varies depending on your location. It’s easy to see those exact figures directly on Incfile’s website when you select your state. All of the pricing is straightforward and transparent.

Incfile can also provide you with assistance for trademarks, a Certificate of Good Standing, DBA (doing business as) names, and business license research.

The fact that you can use Incfile to register your LLC for free is probably the best value you’ll find on the web. With that said, I’d recommend the Gold package, as it truly comes with everything you’ll need to form your LLC, including an EIN.

Incfile Incorporation Services

Incfile also has exceptional incorporation services. You can use them to form a C-Corporation, S-Corporation, or a nonprofit corporation.

Like the LLC services, the entry-level Silver package from Incfile is 100% free for the incorporation services as well. So regardless of the entity type you need to form, all you’ll have to pay is the state fee (prices vary by state).

The free plan comes with preparation and filing for the articles of incorporation and unlimited name availability searches.

You’ll also get registered agent services free for the first year.

With that said, the free plan does lack some of the services you’ll need to officially incorporate. The Gold package, which costs $149 plus state fees, includes an EIN, IRS Form 2553, corporate bylaws, and more.

The Gold package also comes with a business formation kit and express shipping. So it’s really a great value. Incfile has a Platinum package ($299 + state fees). This comes with expedited filing, faster shipping, a free domain, and email service.

I also like Incfile’s incorporation services because they have so much information about each entity type. Even if you’ve never formed a C-corp, S-corp, or nonprofit, you can basically learn everything you need directly from Incfile’s website—for free.

Furthermore, there’s a dedicated learning center with research tools, guides, and seemingly endless resources for incorporations.

If you’re launching a C-Corp, S-Corp, or nonprofit, Incfile is a cost-effective alternative to hiring a traditional lawyer to handle this for you.

Incfile Registered Agent Services

Incfile’s registered agent services are available in all 50 states. They’ll help you manage crucial legal documents and prevent errors with your filings.

Every LLC or corporation is required to have a registered agent. So if you’re using Incfile’s incorporation services, it makes sense to use their registered agents as well. However, existing businesses can also take advantage of registered agent services from Incfile. They make it easy for you to change registered agents, regardless of the state you’re operating in.

Here’s a quick overview of the services and benefits you’ll get from an Incfile registered agent:

  • Always available during business hours
  • Available to receive state and IRS mail correspondence
  • Available to receive documents and legal proceedings on behalf of your LLC or corporation
  • Email and SMS alerts whenever documents are received
  • Automatic mail forwarding for legal correspondence, documents, and other information

My favorite part of Incfile’s registered agent service is the online dashboard.

You can manage everything you need online, at a glance, from anywhere with Internet access.

If you’re using Incfile to form an LLC, S-Corp, C-Corp, or nonprofit, the registered agent services are free for the first year. Then the rate renews at the regular price of $119 per year thereafter.

Customers rave about Incfile’s registered agent services. After reading through testimonials and reviews on their website and third-party platforms, it seems like the registered agent service is why business owners trust Incfile for the long haul.

While it’s obviously great to have the free registered agent initially, so many customers mention how they have been using Incfile for years—long after the complimentary year has expired. So when businesses have the chance to look elsewhere after that first year, they continue to stick with Incfile, which is extremely encouraging.

From helping you avoid missed deadlines, fines, and non-compliance issues to managing paperwork and responding quickly in the event of a lawsuit, Incfile’s registered agent services are top-notch.

This gives you the opportunity to focus on your business while they handle the little things. If something important arises, you’ll be notified by SMS or email immediately.

Overall Pricing and Value

We’ve mentioned Incfile’s prices throughout this guide. But I want to take a moment to provide you with a more in-depth explanation of the packages and rates.

Whether you’re forming an LLC or corporation, these are the plans you can choose from:

Silver — $0 + state fee

  • Prepare and file articles of organization
  • Unlimited name availability search
  • Free registered agent (for first year)
  • Statement and resignation of organizer
  • Statement and resignation of the incorporator**
  • Online status tracking
  • Online document access
  • Lifetime company alerts
  • Standard state filing
  • Electronic document delivery

Gold — $149 + state fee

  • All Silver services
  • EIN/tax ID
  • Operating agreement
  • IRS form 2553
  • Operating agreement
  • Banking resolution
  • Express shipping
  • Unlimited phone and email support
  • Corporate bylaws**
  • Corporation organizational meeting minutes**

Platinum — $299 + state fee

  • All Gold services
  • Business contract templates
  • Free domain name
  • Free email service
  • Expedited filing

**Services specific to corporations

Overall, the Gold package provides the best value. Things like an EIN and more are required to form an LLC or incorporation. That doesn’t come standard with the Silver plan.

I can see why some people would be enticed by the “free” aspect of the Silver package. But the $149 plus state fees for the Gold plan is such a small price to pay for starting a business.

Most people won’t need the Platinum package. The free domain and email service shouldn’t sway you at all. Those are services you should be getting directly from a web hosting provider, not a business formation service. The only real selling point is expedited filing, if you’re in a serious rush.

User Experience

Using Incfile is seamless. Getting started is as simple as navigating to the website, choosing your entity type (LLC, C-corp, S-corp, or nonprofit), and selecting your state.

Incfile will automatically generate your state fees based on the entity you want to form.

Once you sign up and choose your plan, everything is straightforward from there. You’ll enter details about your business and manage it all from Incfile’s intuitive dashboard.

You can track the status of the formation process online. Once you’re officially registered, you can use the dashboard to access crucial documents. Your registered agent will notify you via SMS or email if something requires your attention (like an urgent piece of legal mail).

Overall, the interface is really clean, and it’s easy for anyone to navigate and figure out.

Customer Support

One other key of choosing the Gold plans from Incfile is that you get unlimited phone and email support. Whether you need help finding a document or just have a general inquiry, the Incfile team will be there to provide assistance.

Phone support is available from Monday to Friday, 9 am – 6 pm CST.

As previously mentioned, Incfile has outstanding registered agent services as well. Due to the human touch associated with this service, I think it’s worth mentioning in the customer support category.

Your registered agent can receive documentation on your behalf, ensure you stay compliant, forward your mail, and alert you if something comes up.

Most of the online reviews from existing customers say great things about Incfile’s support. With that said, there are a handful of people who weren’t exactly satisfied. I saw a few recent reviews from people who said they had trouble reaching an agent. But those seemed to be outliers compared to the bulk of reviews.

Final Verdict

If you need to form an LLC, C-Corp, S-Corp, or nonprofit corporation, Incfile should definitely be taken into consideration.

They provide a cost-efficient alternative to hiring a lawyer. Some of their services are completely free; you just have to pay the state fees.

When you sign up for one of Incfile’s business formation plans, you’ll also get registered agent services free for one year. It’s tough to pass up on a value like that.

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6 Best Online Fax Services for Small Business (2021)

Are you looking for the best online fax service for your small business?

Upgrading to an online fax service offers your business more security, speed, and can improve communication across the board.

In this article, we’ve hand-picked some of the best online fax services you can use along with your WordPress website.

Best online fax services for small business

Why You Need an Online Fax Service?

With traditional fax machines you’re limited by the older technology.

However, faxing is still one of the most secure ways to send and receive information. Online fax services combine the power and ease of email with the security of traditional faxing.

Plus, there’s no need to have a physical fax machine or fax modem.

For our business, we often have to send fax when communicating with the government, IRS, and sometimes for high-level bank information.

Online fax services can streamline your faxing process and integrate with the software you’re already using. You can even send faxes directly from your email client of choice.

This means less time spent with your faxing needs, and more time growing your business.

Moving from traditional faxes to an online fax service can help your business in a lot of ways:

  • Can quickly sign documents electronically with a single click
  • Manage, store, and search through faxes in one place
  • Receive and send faxes on the go from your mobile device
  • Save time by filtering out spam and junk faxes
  • Enhance your document storage and security
  • Streamline communication by integrating your faxes with other digital communication

The best part is that online fax is made for remote teams. You don’t need to be in an office to send or receive fax.

That being said, let’s take a look at the best online fax services that you can use to support your small business.

1. Nextiva

Nextiva Fax

Nextiva is the best online fax service for most businesses. It has affordable pricing, flexible plans, and an extensive set of features.

It’s commonly known for its suite of business communication tools and business phone services.

However, Nextiva also offers an excellent online faxing service that’s an excellent fit for most small business owners.

Note: We use the Nextiva business phone service and communication platform on WPBeginner. Their service is always reliable, and they have incredible customer support.

What we really like about Nextiva is that it’s perfect for remote teams. You can send and receive fax documents via mobile, desktop, and tablet without being in the office.

If you have a traditional fax machine, Nextiva can also integrate with that as well. They allow you to migrate your existing fax number to their platform.

With that said, a free toll-free number and local phone number are included when you sign up.

If your company is growing and you need additional numbers, you can add numbers from your dashboard with a couple of clicks.

Online storage is automated as well. Nextiva will save all of your incoming and outgoing faxes for 6 months. You can easily download and share your faxes with other members of your team.

Nextiva is used by organizations like Taco Bell, Stanley Steemer, and the Buffalo Bills. However, the plans are well-suited for small businesses as well.

We recommend getting the unified communication platform that starts at $18.95 per month, and it includes unlimited fax, unlimited voice & video calling, auto-attendant, toll free numbers, and more.

You can also purchase vFax separately starting at $4.95 per month which includes 500 pages, but this plan is limited and doesn’t let you use the full power of Nextiva.

Overall, it’s the best business phone & fax app for growing businesses.

Expert Review: We believe Nextiva is the best online fax service for small business owners. Along with fax, you also get their full business communication platform.

2. RingCentral

RingCentral Fax

RingCentral is another great online fax service for small and growing businesses.

RingCentral is a leader in providing business communication services like phone lines, instant messaging, video conferencing, and of course, online faxes.

RingCentral Fax can work as a standalone service or integrate with the business VoIP and communication platform.

This fax service is best suited for businesses who send a high volume of faxes, like legal offices, or universities. If your company uses outdated physical fax machines, RingCentral can integrate and upgrade your existing fax system.

You’ll also find standard fax features like online cover pages, cloud storage service integration, encryption, and the ability to addon unlimited fax numbers.

There are many integration options available, including Dropbox, Google Drive, Microsoft Outlook, and more.

It’s also a truly mobile solution. You can set up text messages to alert you of incoming faxes. Or use the mobile app to send, receive, view, and store faxes.

There’s even a built in option to block spam faxes and reduce the total number of junk faxes you receive.

With RingCentral, you can get a large number of pages at an affordable price. The Fax 1500 plan is $17.99 per month for 1500 pages, which breaks down to $0.012 per page.

But the best value is their Standard bundled plan for $24.99 per month. This plan lets you fax an unlimited number of pages per month, plus it bundles business phone calls, video meetings, audio conferencing, business text messages, and more.

The only real downside is that their fax storage is limited to the last 200 faxes. You’ll either need to delete existing faxes, or store them externally.

Expert Review: We believe RingCentral Fax is best for companies who need to send a high volume of faxes or want to bundle business communications together.

3. SRFax

SRFax

SRFax is an online fax service that offers the highest levels of security, privacy, and compliance.

The high security standards make it the best choice for healthcare providers. Security is a must when transmitting sensitive information like patient records and medical information.

You’ll be happy to know that SRFax is fully HIPAA compliant for US-based healthcare practitioners and PHIPA compliant for those based in Canada.

Many online fax services offer HIPAA compliance, but usually, these services deliver the bare minimum. The security features that SRFax provides end up exceeding the HIPAA regulations.

For example, you’ll find application security, hardware and organizational safeguards, user authentication, backups, and around the clock physical security.

Plus, faxes are sent using 2048-bit encryption, while the industry standard is 256-bit.

Beyond security, you’ll find standard features like unlimited storage and cross platforms integration.

There are also Windows and Mac-specific clients that let you send and receive faxes from your preferred programs.

The pricing is a little higher, starting with the Lite plan for $7.95 per month for 200 pages. However, if you need strong security the price is worth it.

You can also send international faxes. The international fax rates are based on the country you’re sending or receiving faxes from.

Expert Review: We believe SRFax is the best online fax service for businesses who need the highest levels of security.

4. Fax.Plus

Fax.Plus

Fax.Plus is one of the best online fax services for small teams. It’s simple to use, and the goal of the service is to save you as much time as possible.

If you’re looking for a way to upgrade your existing fax process while keeping things affordable, this is a great option.

You can even keep your existing fax number for free or add new toll free and local fax numbers.

There are dozens of integrations to manage your faxes within the platforms you’re already using. This means no complicated setup process or wasting time learning the ins and outs of new software.

For example, it integrates with platforms like Microsoft Office, Google Chrome, Slack, Google Drive, G Suite apps, and more.

You’ll also find a bundled iOS and Android app, so you can read, download, and send faxes on the go. The mobile app is as easy to use as the web portal.

It lets you scan documents from your phone, add digital signatures, add notes, organize your archives, send faxes, and more.

You can also optimize faxes with a single click, which makes them easier to read and will send faster.

If you have simple needs and only need to send a handful of faxes every month, then there’s a free plan you can use. This plan lets you send up to 10 pages per month. However, you can’t receive faxes, only send.

Although Fax.Plus is well suited for very small businesses, you’ll find a variety of plans to cater to all types of business needs. The Basic plan is $5.99 per month and lets you send up to 100 pages.

If you’re looking for the best deal, the Business plan lets you send 800 pages every month for $19.99.

Expert Review: We believe Fax.Plus is the best online fax solution for small teams.

5. eFax

eFax

eFax is a well-known name in the online fax services space. It’s feature-rich, easy to use, and places a focus on fax archiving and storage.

This makes it a great choice for organizations that need to store faxes for a long time, like financial and legal institutions, universities, real estate offices, accountants, and more.

Although other fax providers offer fax storage and archiving, none go as deep as eFax. This provider offers unlimited storage for your faxes, plus in-depth fax archiving and organization features.

When faxes are saved, additional information is stored, like the transmission time and date, the recipient and sender name, and more. This makes it easy to sort and find the exact information you’re looking for.

Your faxes are stored automatically, plus older faxes won’t be deleted to make room for new incoming faxes.

Basically, with eFax, you’ll never lose a fax, ever again.

The included mobile app is available for both iOS and Android. It lets you archive, search, download, and forward directly from your phone.

Another great mobile feature is the ability to take pictures of documents and send them as a fax, all while you’re away from the office.

You’ll also find standard functionality like support for electronic signatures, multiple users, cloud storage integrations, and the ability to send a fax to up to 20 recipients.

Plus, there’s support for international faxing, and every fax is sent through an encrypted SSL connection.

eFax has some of the highest pricing on this list. But, for companies who need advanced search, storage, and archive features, it’s still a great choice. Plans start at $16.95 per month for 150 inbound and 150 outbound faxes.

The best value plan is the Pro plan which costs $19.95 per month and lets you send 200 fax pages and receive 200 pages every month.

However, there is a one-time $10 setup fee on both paid plans that you’ll want to be aware of.

Expert Review: We believe eFax is a great choice for businesses who need advanced search, storage, and archive features.

6. MyFax

MyFax

MyFax is an excellent online fax service for small businesses and work from home businesses that send and receive a low volume of faxes.

You could use a free fax service to send faxes every once in a while. However, free services can be unprofessional since you can’t change the cover sheet, and you usually can’t receive faxes either.

We recommend using an affordable service like MyFax instead. MyFax is very simple and can also be used to send faxes anywhere in the world.

All plans come with unlimited fax storage, a free fax number, and a library of pre-built cover templates you can customize to match your brand. You can even search through your fax archives.

There’s also an Android and iOS app to take your faxes on the go.

Smaller teams can take advantage of the Home Office plan for $8.33 per month, which lets you send 100 pages and receive 200 pages every month.

There are also more expensive plans if you need to send or receive additional pages. If you go over the page limits, there’s an overage charge of $0.10 per page.

Expert Review: We believe MyFax is the best online fax service for businesses on a budget.

Which is the Best Online Fax Service for You?

After researching all of the top online fax service providers, we believe that Nextiva is the best online fax provider in the market.

You can send a high volume of faxes for a low price. Plus, it comes with powerful features like business phone, video calls, and other collaboration tools.

Those reasons and more are why Nextiva is the best online fax service and business communication platform in the market. This is also why WPBeginner uses Nextiva.

In our research, RingCentral came in a very close second. The online fax service offers a lot of the same features as Nextiva, for a great price. However, you don’t have the same level of flexibility.

You really can’t go wrong with either of these two online fax services.

We also looked at other fax service providers like MetroFax, HelloFax, FaxZero, GotFreeFax, J2 Global, mFax, and more.

However, our goal is to make it easy for you to choose the best online fax provider without causing choice paralysis, so we didn’t review them all here.

Online Fax Services FAQs

After helping hundreds of business owners find the best online fax services for their needs, we’ve come across a lot of questions.

Below are some of the most frequently asked questions we’ve received about online fax service providers.

How does online faxing work?

Online faxing turns your documents into a file format that’s readable by a fax machine and vice versa.

If you’re sending a document to a fax machine, you’ll enter your recipient’s fax number in your online fax dashboard and attach your file.

The online faxing services translate the document into a file type the fax machine can read and sends it to the recipient over a phone line.

The document is then printed and read as a standard fax or viewed with their online fax service provider.

What is the best free online fax service?

We don’t generally recommend using a free fax service provider, especially in a business setting. Free online fax services allow you to send faxes, but you generally can’t receive faxes or customize the cover sheet.

If you only need to send up to 10 pages a month, then we recommend the Fax.Plus free plan.

This also gives you the ability to upgrade if your faxing needs increase.

What is the safest fax app?

All fax apps are incredibly safe and use encryption to ensure your transmissions are protected. Faxing is one of the most secure forms of communication.

However, SRFax has the highest security protocols out of any online fax app. Their primary focus is providing a secure fax service for healthcare professionals, which needs to comply with HIPAA.

SRFax has strong encryption, spam blocking, user authentication, automatic fax deletion, and more.

Can I fax without a fax machine?

Yes, you can fax without a fax machine. Online faxing services like Nextiva and RingCentral allow you to send faxes via the internet, tablets, and even mobile devices.

You can also send online faxes to a traditional fax machine with an online fax service.

We hope that this guide helped you choose the best online fax service for your small business. You may also want to see our comparison of the best email marketing services, and best AI chatbot software for small business.

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The post 6 Best Online Fax Services for Small Business (2021) appeared first on WPBeginner.

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Inc Authority Review

Inc Authority is one of the most reliable and trusted names in the business formation industry. For over 30 years, they’ve helped form tens of thousands of LLCs and corporations.

The company is best known for its low cost and simplicity. In fact, Inc Authority even offers free business formation services (more on this shortly).

Entrepreneurs across all 50 states have used Inc Authority as a one-stop shop for starting a business. In addition to the business formation plans, Inc Authority offers other services related to tax planning, retirement planning, bookkeeping, funding, business credit, and more.

If you’re looking for a cost-effective way to start an LLC or corporation without the hassle associated with filing paperwork on your own, Inc Authority has you covered.

Is Inc Authority right for you? This in-depth review will tell you everything you need to know about their services. From plans and pricing to real customer reviews, you’ll be able to make an informed decision as it pertains to your needs after reading this guide.

Ready to get started? Sign up for Inc Authority today!

Inc Authority Business Formation Services

As previously mentioned, Inc Authority has an extensive list of service offerings. But the company is best known for its business formation services, which will be the primary focus of this review.

Those services can be segmented into three main categories—LLC services, incorporation services, and registered agent services. We’ll cover each of these in greater detail below.

Inc Authority LLC Services

The LLC services by Inc Authority are the most popular offerings from this provider. They make it easy for anyone to start a new LLC online—for free.

Yes, you read that correctly. Inc Authority is one of the only business formation companies on the market offering truly free LLC services.

It’s really easy. Just select your state, enter some details about your business, and Inc Authority will handle the rest.

The first thing they’ll do is check the availability of your business name with the state. From there, they’ll prepare and file your LLC documents and submit those to the state as well. Inc Authority also provides tax planning consultation, business funding analysis, and exceptional customer support via phone or email.

Another top benefit of using Inc Authority for your LLC registration is the digital access to your LLC documents. Everything will be delivered to you electronically and is stored for easy access through an online client portal.

The free services don’t stop there. When you use Inc Authority to form your LLC, you’ll also get free registered agent services for one year.

One of the upsells you’ll see during the registration process for your free LLC is for an employer identification number (EIN).

Inc Authority charges $49 for this service. You could avoid the cost and get a free EIN directly from the IRS on your own. But it’s certainly more convenient to get one from Inc Authority and avoid the hassle. Other LLC services charge $75 or more for an EIN, so $49 isn’t too bad compared to alternatives.

Aside from the EIN, the only payments you have to make will be for the state filing fees. This amount varies from state to state.

An LLC operating agreement does not come with the free plan either. All banks require an operating agreement. This document will provide proof that you own the LLC, and it’s required to open a new account. Operating agreements also ensure that courts enforce your liability protections. It establishes the rules that govern how your profits are divided and how decisions are made at your LLC. Adding an operating agreement to your LLC plan is an additional $89.

Inc Authority also offers a legal document package. This contains ownership certificates and LLC seals. The package is crucial if you’re ever audited by the IRS or sued by a third party. The legal documents services add-on is offered for $99.

You’ll also have the option to add express processing to your order. This $49 fee moves your order to the front of the line. Inc Authority will immediately process the information and get it to your state on the same business day.

They continue to pile on the upsells for things like domain registration and success advisor services. Most of you can ignore these.

Overall, Inc Authority legitimately offers free LLC registration. You’ll be hit with a handful of upsells along the way, but you could turn most of those down and handle them on your own.

Inc Authority Incorporation Services

You can also use Inc Authority to form a corporation. This includes both C Corporations and S Corporations. Just like the LLC Services, Inc Authority’s incorporation services are also free—you just pay the state fee.

Getting started is really easy. Just head to the Inc Authority website, choose your entity type, and select your state to proceed.

If you need some guidance choosing the right entity type for your corporation, Inc Authority has useful resources to help you decide which option is right for you.

Similar to the LLC services, here’s a quick overview of what you’ll get for free with Inc Authority’s incorporation services:

  • Business name check for your corporation
  • Preparation and filing of incorporation documents
  • S-Election document IRS form 2553
  • Free registered agent for one year
  • Digital copies and online access to incorporation documents
  • Expert support (phone and email)
  • Tax planning consultancy
  • Business funding analysis

Again, all of these services are 100% free. There’s no catch, and you’ll only have to pay the state filing fees.

With that said, Inc Authority does hit you with some upsells throughout the ordering process. The first one you’ll see is for an employer identification number (EIN). Inc Authority charges $49 for this. It’s something that you’ll need, so getting it now as you’re finalizing the order makes sense.

Inc Authority can also customize your corporate bylaws. This service costs $89. They offer a legal documents package as well. The package contains things like customized organizational meeting minutes, custom stock certificates, and an official incorporation seal. All of this costs an additional $99. You’ll also have the option to expedite the processing of your documents for $49.

The upsells continue with domain registration and success advisory services. These start at $10 and $27 respectively. You can skip these.

Again, you can use Inc Authority’s incorporation services to set up a C-Corp or S-Corp for free.

Will you be presented with some upsells along the way? Yes, but it’s not a big deal. Skip the ones you don’t need and just keep moving forward.

Inc Authority Registered Agent Services

The registered agent services from Inc Authority are popular as well.

As previously mentioned, if you form an LLC or incorporation through this service provider, you’ll get a free registered agent for one year.

As a registered agent for your business, Inc Authority will act as a responsible third party with a physical address in the same state as your company. They can receive official government documentation like tax forms or lawsuit notices on your behalf.

You could technically be your own registered agent, but we advise against that.

The registered agent will always be available during business hours to accept statutory notice on behalf of your company.

As for the registered agent pricing, there’s no exact information on those rates beyond the first free year. I reached out to a customer service representative via live chat on the Inc Authority website for a quote. While the agent responded within 30 seconds, they were unable to give me an exact number. I was told that the “registered agent pricing varies depending on the state and business type.”

The only way to get an exact quote is by speaking with an agent over the phone regarding your unique situation. This is a little bit of a hassle, considering other sites are more transparent with the registered agent costs. But when you’re using a free service, you can’t expect everything to be perfect.

Overall Pricing and Value

Inc Authority’s business formation services are 100% free. Whether you’re starting an LLC, C-Corp, or S-Corp, those free services include:

  • Business name check
  • Entity formation document preparation and filing
  • IRS form 2553
  • Registered agent services for one year
  • Digital document delivery and storage
  • Phone and email support
  • Tax planning consultancy
  • Business funding analysis

As you go through the order process, you’ll be presented with several different upsells:

  • Employer identification number (EIN) — $49
  • Operating agreement — $89
  • Corporate bylaws — $89
  • Legal documents package — $99
  • Express processing — $49
  • Domain registration — $10
  • INC success advisor — $197 per year or $27 per month

Depending on the add-ons you need, you’ll likely end up paying more than $0.

However, these add-ons are not a requirement. You can handle these on your own if you truly want to start your business for free. The only fee you’re actually required to pay is the state filing fee. This number varies from state to state.

If you’re interested in lots of add-ons, you might want to consider one of the Inc Authority premium startup bundles. In some cases, it’s cheaper to get a bundle instead of adding on each service individually.

Pricing is not available online, so you’ll need to call up Inc Authority to talk pricing or ask questions about these bundles. But here’s an idea of what you get in each package:

Starter

  • Verify name availability
  • Custom state filing
  • Operating agreement
  • Bylaws
  • Record book and company seal
  • Meeting minutes and resolution
  • Ownership certificates
  • Tax ID (EIN)
  • Business credit and funding analysis
  • Tax consultation
  • One year of INC success advisory services

Executive

  • All Starter services
  • Business license report
  • Website domain

Tycoon

  • All Executive services
  • Express processing
  • BizCredit Express
  • Business credit coach
  • Multi-tiered credit building system
  • Business credit LaunchPad
  • D&B credit bureau registration

The Starter package is really all you need if you’re just looking to start a business. The other two options go above and beyond what you likely need, though it does depend on your specific situation, business, and needs.

In terms of value, Inc Authority’s free plan is more than enough for most businesses. You’ll likely add on at least a couple of the upsells (because it’s easier than doing it yourself). But you probably won’t find a better deal on the web from a business formation service that will actually let you check out for free (except for state fees).

User Experience

The user experience with Inc Authority is seamless. I went through the process a few times with different entity types to get a feel for it, and it really only takes 2-3 minutes from start to finish.

Everything is very straightforward, and you can figure it out even if you don’t have any experience using a business formation service.

The only potential gripe that users might have is that they’re presented with so many upsells throughout the order process. But those few extra clicks are a small inconvenience to avoid paying anything at all.

Compared to other business formation services we’ve reviewed, Inc Authority might have the simplest user experience of them all. The layout and dashboard are really clean, and it almost feels too easy.

Customer Support

When you sign up for Inc Authority, you’ll get unlimited phone and email support.

Personally, I reached out to a customer support rep via live chat with a question about pricing. I was pleased that the agent responded almost immediately. It was also refreshing to know that I was chatting with a real human and not a chatbot.

While I didn’t quite get the answer I was looking for from the agent I chatted with, they quickly put me in contact with someone who could answer my questions in greater detail over the phone.

Final Verdict

Do we recommend Inc Authority? Absolutely.

It’s one of the only truly free business formation services on the web—with no strings attached. You can use them to form an LLC, S-Corp, or C-Corp for $0 (just paying your state filing fees).

With that said, I’d recommend adding a few extras to your plan. At the very least, get an EIN from Inc Authority. It’s easier than dealing with the IRS directly to save a few bucks.

Between the LLC services, incorporation services, and registered agent services, Inc Authority has everything to accommodate the needs of your startup.

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Technical Presentation Delivery Notes

I’m writing this post as I’m sitting in the airport, leaving the CodeMash conference. This has been my first “true” conference for a while, because I was able to not just speak and stand in a sponsor booth but actually participate in a lot of sessions and talk to a lot of people. I had a blast, and both the IRS and my wife consider this a work trip.

I have been presenting in international conferences for over a decade now and I wanted to put in a few words for people who are speaking at a technical conference. None of this is new, mind you. If you have been reading any recommendations about how to present in conferences, I’m probably going to bore you. I’m writing this because I saw several sessions that had technical issues in how they were delivered. That is, the content was great, but the way it was delivered could be improved.