… continuing on with the step-by-step process of incorporating a small business on Legal Zoom…
11. After you enter your state of incorporation and your proposed business name and hit the CONTINUE button, it asks: Would you like us to help you obtain S corporation status? It offers 3 options:
- Yes, obtain my S-Corp status with the IRS
- Yes, prepare my S-Corp form only
- No (which means you want a C-Corp)
Here’s the help that Legal Zoom supplies in regard to this question: “An S corporation is treated as a pass-through entity for tax purposes. This avoids double taxation and may simplify your taxes. LegalZoom can obtain S corporation status for you, or we can prepare IRS Form 2553 so that you can more easily obtain it on your own. Please note that we can only help if the corporation has a fiscal year ending December 31. Please note that one of the restrictions that apply to an S corporation is that it cannot have any preferred stock. You may only have common stock. Preparation of IRS Form 2553 is included with the Gold Incorporation Package — otherwise, a $45 charge will apply. To have LegalZoom obtain S corporation status for you, an $80 charge will apply ($35 with the Gold Incorporation Package). If you would rather be a C corporation, select no. Which is better? There is no right answer to this question. The majority of our users form S corporations. You may wish to consult with an accountant to see which type of corporation is best for you.”
I’m going to obtain S-Corp status for my business, and I’m going to have LegalZoom obtain it for me for $80. I have better things to do.
12. Same thing with the next question: Would you like us to help the corporation apply for a federal tax identification number?
- Yes, please obtain my tax ID for me.
- No, prepare the form only
I’m going to have them obtain my tax ID for me. That’s why I’m using a service. It’s going to cost me $79. When I look at my normal hourly rate, I have to ask myself how long it would take me to figure out how to do it on my own, then to actually do it, and then to deal with the anguish afterwards if I did it wrong. Probably more than $79.
As I continue to draw parallels between this process and our online process of helping authors publish and market books at Outskirts Press, this is another similarity. We offer similar services/upgrades through the process. For instance, our authors are presented with the option early in the pre-production process to have us officially register their copyright for them with the U.S. Copyright Office. They can do this on their own, just like I could obtain my S-Corp status on my own, but it’s just easier to let someone else do it all for you. At least, that’s how I feel…
13. Then it asks: Are you a doctor, dentist, lawyer or other licensed professional seeking to form a Professional Corporation? If so, please check this box.
Personally, I’m saying No to that one, which means I leave the box blank.
14. Click SAVE AND CONTINUE
… to be continued…