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Incorporating Services and Succession Planning

Jul 28, 2008
If you run a growing or established small business you may have thought about setting up a corporate structure. Setting up a corporate entity may be the obvious choice for a successful small business, but you may have some reticence when it comes to taking action. In the past incorporating a business involved a lot of paperwork, along with extensive legal counsel. Fortunately, this isn't such a big hurdle this day in age. Like a lot of things, the advent of the Internet has made incorporating easier than you may think.

There are incorporating services available online that makes setting up corporate structure easier than ever. The way it was done in the old days, was that if you wanted to incorporate you would go to an expensive attorney that specialized in incorporating. They would handle all the legalities, the paperwork, and get you incorporated. This took care of all the necessities of incorporating your small business. The only problem is that they come at a cost, a big cost. It was not unusual at all to see attorneys charging tens of thousands of dollars for these types of services. Fortunately, it doesn't have to be that way, thanks to many online incorporating services. These services provide you with all the necessary paperwork and filings that needs to be completed, in order to setup your corporate structure. Essentially, incorporating is just a matter of filling out the correct forms. It does not take an eight-year degree to follow simple process of filling out necessary forms. Incorporating services do this for you. They provide you with the information that's necessary, and you fill out the forms. The advantage here, of course, is that this comes at a substantial discount to hiring an attorney. If you want to save even more money, there are even books and software available that will help you through the process.

Following the legal methods that are required to set up a corporation is really the simplest step in incorporating. If you decide to finally incorporate your small business, you must decide which corporate entity is best suited for you. There are three popular corporate entities, the C Corporation, the S Corporation, and the limited liability company or LLC. They all have particular benefits that may or may not be suited to your business needs. A C Corporation, for example is the most comprehensive corporate structure, but it comes with its drawbacks. Because the C Corporation is the most comprehensive, it comes with higher costs and more administration. That's why setting up a C Corporation is best suited for larger scale businesses. The S. Corporation offers less cost, and less administration, but may not offer all the bells and whistles. It is a great entity for those trying to reduce their Social Security taxation. The LLC is the easiest corporate structure to set up. It offers the best liability protection of all of the above, without many of the headaches that come from administration. For obvious reasons, it is recommended that you look at all the pros and cons of going with these entities before deciding on your incorporating services. Each individual's business is different, they have different requirements. One corporate structure may be great for one individual's business, though it may not be so good for another's. Once you choose between an LLC, S Corp, or C Corp the difficult part is completed. All that remains is finding quality incorporating services that will get your corporate structure set up.

Naturally, if you've already set up your Corporation, or business and are at the later stages of business, the importance of succession planning, should be stressed. It's not at all unusual for the savviest of business owners to spend a career building great businesses. What's equally not at all unusual is for those very same owners not to practice appropriate succession planning. For many, succession planning is a simple process of choosing or finding someone to replace their business. What they don't commonly think about is that there very involvement in the business is often responsible for the businesses success. When this is the case, successful succession planning is a must. The new business owner should be gradually implemented in the business. This means meeting all clients, understanding their needs and quirks. This is not something that can be adapted overnight, it takes time.

In addition to introducing new ownership through proper succession planning, there are other factors as well. For one, you'd like to transfer a business with as minimal taxation as possible. Thus the business sales should be structured in a way that you'll end up with the most profit. This may involve structuring the sale via stock or other methods. It's not always a good idea to take one large lump sum. This can be true for both tax purposes, as well as new ownership. Structuring a sale through a type of earn out provision is often the fairest strategy for both the buyer and the seller. Proper succession planning will not only mean a successful sale, but a successful purchase, resulting in a win-win for all involved.
About the Author
If you're looking for the succession planning make sure to check the many online resources. For more on the ins and outs of incorporating services you can get more details.
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