From the May 1999 issue of Startups

The big guys all do it, so should you be rushing to incorporate your company? Understand, for starters, that there are many valid umbrellas under which to operate a business (among them sole proprietorship, partnership and corporation) and that incorporation itself offers multiple variants, including limited liability corporations (LLCs), S corporations and the more conventional C corporation--the "Inc." that's part of the formal names of most large companies. But it's not just a name that's at stake: Taxation, liability (in the event of lawsuits) and control of the business are all influenced by the business structure you use.

Which is "best"? There's no pat answer--experts argue about the choices, and the worse news is that, much like marriages, business structures are easy and cheap to create, but expensive and complicated to undo. That's why we've gathered the following Web sites, books and more to help you sort through the maze.

Start Here

Usually our advice is act now, analyze later--but not when it comes to formalizing your business's organization. Read, study and think some more before signing on any dotted lines. Where to begin?

Selecting the Legal Structure for Your Business: Excerpted from SBA documents, this must-read provides a thorough walk-through of the comparative advantages of sole proprietorships, partnerships and corporations.

Incorporating: Good stuff--pithy, well-written--drawn from Court TV materials. This is the place to get the answers to basic questions.

Limited Liability Companies: How They Work: LLCs, which deliver many of the tax advantages of partnerships plus some of the legal advantages of corporations, have been exploding in popularity in recent years--and this discussion, from legal publisher Nolo Press, tells why. (For more on LLCs, see "Money")

Pros & Cons of C-Corporations, S-Corps, Ltd. Liability Companies, Etc: As a compilation of posts to Internet newsgroup misc.business.consulting, this document gives a fast overview of the options available to you.

Book 'Em

Head to any major bookstore, and usually there's a shelf full of books on the how-tos of incorporating. Some suggestions:

How To Incorporate: A Handbook for Entrepreneurs and Professionals, by Michael R. Diamond and Julie Williams (John Wiley & Sons, $19.95, 800-225-5945): Takes a thorough look at how to structure a corporation to gain tax, legal and business advantages.

How to Form Your Own Corporation Without a Lawyer for Under $75.00, by Ted Nicholas (Upstart Publishing, $19.95, 800-898-3546): Complete with forms and corporate bylaws, this terse book is meant for those who want to find out the facts and necessary steps without much prelude or discussion.

Do It Online

Yep, you can set up a corporation in a few minutes online, for fees that are usually less than $100, plus state filing fees. (These vary from $40 for creating a Kentucky LLC to $915 for a California corporation.) Cyber-vendors will walk you through setting up shop anywhere in the United States--even in some foreign countries--but be aware, laws and benefits vary from place to place, and these sites offer scant analysis of regional pros and cons. Best advice is to do plenty of research elsewhere before logging on to do the deed.

Among the best DIY sites:

  • The Company Corp.: Check out the FAQs, which offer a useful summary of what's involved in doing it online.
  • MyCorporation.Com: This site is thin on background info, but it's fast-moving. Starting at $99, it lets do-it-yourselfers incorporate online.

Get Advice

Even if you want to go it alone, buy an hour or so of time from an attorney to chew over your plans--and the possible problems. Where to find a lawyer?

West Legal Directory: With a listing of 800,000-plus lawyers, this is the mother lode of U.S. legal talent. Searches can be conducted by state and practice area. (Check under "Corporations and Business Org.")


Freelance writer Robert McGarvey, who has been a sole proprietor, a partner and incorporated, still prefers the no-hassle option of sole proprietorship.