5 Things to Consider Before Incorporating Your Business
Expert Insights from SimpleCorp®
Incorporating your business is a big step. It can protect you legally, unlock tax advantages, and position you for growth — but it’s not a decision to rush. At SimpleCorp, we’ve seen too many entrepreneurs file the wrong way, at the wrong time, or without the right structure. That can lead to extra costs, tax surprises, or even legal issues down the road.
Here are five key considerations every business owner should review before they incorporate.
1. Your Business Structure: LLC, Corporation, or Something Else?
Why it matters: Your legal structure affects your taxes, personal liability, compliance requirements, and even your ability to raise capital.
LLC – Flexible management, simple tax reporting, strong liability protection.
Corporation (C-Corp) – Best for raising venture capital, issuing stock, and scaling nationally/internationally.
S Corporation – Pass-through taxation with certain tax savings potential, but strict eligibility rules.
💡 SimpleCorp Tip: Don’t just pick what sounds popular — choose what fits your growth plans, industry, and ownership structure.
2. Where to Incorporate (Your Home State vs. Another State)
Why it matters: Incorporating in the wrong state can add unnecessary filing fees and ongoing compliance costs.
Home state incorporation is often the simplest and most cost-effective.
Incorporating in Delaware, Nevada, or Wyoming can offer legal/tax advantages only if your business operations justify it.
💡 SimpleCorp Tip: If you incorporate out of state but operate locally, you’ll likely have to register as a “foreign” entity and pay extra annual fees.
3. Tax Implications and IRS Classification
Why it matters: The IRS doesn’t just care about what you are — it cares about how you’re taxed.
An LLC can be taxed as a disregarded entity, partnership, S-Corp, or C-Corp.
A corporation defaults to C-Corp but can elect S-Corp status with Form 2553 if eligible.
Each choice has different rules for owner compensation, profit distribution, and tax reporting.
💡 SimpleCorp Tip: Talk to a CPA before you file — changing your tax classification later is possible, but timing matters.
4. Ownership and Equity Planning
Why it matters: Incorporating locks in certain rules for ownership, profit sharing, and decision-making.
Will there be multiple owners (members/shareholders) or just you?
Do you plan to issue stock or membership interests to investors?
How will you handle ownership changes or buyouts?
💡 SimpleCorp Tip: Create an Operating Agreement (LLC) or Bylaws (Corporation) from the start. It prevents disputes and sets clear expectations.
5. Compliance Obligations and Ongoing Costs
Why it matters: Incorporation isn’t a one-and-done step. Every entity has ongoing requirements.
Annual report filings and fees
Registered agent service
Business licenses/permits
Recordkeeping and meeting minutes (corporations)
💡 SimpleCorp Tip: Build compliance into your budget and systems from day one — our SimpleShield™ Annual Protection Plan makes it easy.
Bottom Line
Incorporation can protect your assets, improve credibility, and set you up for growth — but only if you make informed decisions before you file.
At SimpleCorp, we guide you through each step, from choosing the right structure to securing your EIN and staying compliant year after year.
📌 Ready to start your business the smart way? Get Started with SimpleCorp →