How to incorporate a small business online – Part 6

Over the past two weeks I’ve been using Legal Zoom to incorporate a new small business and have been posting the progress. We are now at the stage of the process where we are defining principals.  It asks for the director, the president, the treasurer, and the secretary.  Did I say I was starting a small business? I am! All those people are me, and there’s nothing wrong with that when you’re first starting out.  These are the same answers I provided back in 2003 when we incorporated Outskirts Press, and now look at it – a back-to-back-to-back Inc. 5000 honoree of the fastest-growing companies in America.  So, you just never know…

If you have other people involved with your new small business, you can certainly enter them instead, and the screen on Legal Zoom even has space for additional officers if you have established those already, although you can leave that optional section blank if you want.

…And that brings us to stockholders… Here’s where you divide the number of shares you set on the previous screen among the principals of your company. Since it’s me, myself, and I, I am the sole stockholder with 1000 shares, each of which is worth $0.01 so I will be providing a capital contribution into this company in the amount of $10 in cash (if you’re in Texas, you have to contribute more).   Offer your address again and then declare whether you have a joint owner. If you’re married, the answer to this is probably “Yes” but that’s between you and your spouse.

Next you provide some contact information for the IRS. All pretty self-explanatory. Finally, this screen asks you if you will be operating under a trade name.  In most cases, you might answer “No,” but if you think you might have one or more DBAs (doing business as), then answer “Yes” here, although be prepared to provide your different trade name on the next screen.  Lastly, Legal Zoom asks if you are planning on hiring any employees in the next 12 months (and if so, be prepared to say how many from among three different categories).  It’s easiest to say no to both of these since answering “No” doesn’t prevent you from starting a DBA or hiring someone if you need to.

If earlier in the online process you requested Legal Zoom to complete your Federal Tax ID application for you, the next screen covers that information, which we’ll cover next time…


Incorporating a small business – Part 5

So after a week of filling out the online questionnaire with Legal Zoom in order to incorporate a small business, here’s how far along we are on their progress bar…

In other words, we have to accelerate this – I don’t want to still be doing this series of posts during Christmas.  It also tells us that their “15 minute” estimate might have been just slightly off.  It doesn’t help that I have to start over from scratch every time I leave their site to do other things.   Hey, Legal Zoom, since you’re saving the information I enter (I can tell because the forms are pre-populated with my choices), can’t you save my place, too?

But, I digress. The next screen following the Compliance Calendar that I mentioned last week has three sections for stock, fiscal year, and corporate minutes. They all sound daunting, but the reality is that for most small corporations, these are all pretty easy questions to answer:

1 – How many shares of common stock can the company issue? Legal Zoom offers some basic help with answering this question, along with a suggestion that for new corporations with just a few shareholders, the amount can be an easy round number like 1000. So that’s what I’ll enter, although part of the reason it’s a little easier for me is because I don’t live in one of these states:

New York
New Mexico

2 – What is the par value of the shares? The most common answer to this when forming a new corporation is 0.01, which is their default.

3 – Next it asks when the end of the fiscal year is for the new company, and the most common answer, especially if you’re an S-Corp, is December 31.

4 – The final question on this screen involves the maintenance of corporate minutes and offers to provide what basically sounds like a template for them for $69-$99/year.  I think I’ll pass.

… to be continued…

Incorporating a small business on Legal Zoom – Pt 3

… 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
  • No

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.


… to be continued…


Incorporating a small business on Legal Zoom – Pt 2

… Continuing from where we left off yesterday as we incorporate a small business on Legal Zoom step by step…

6. Select your state. I’m choosing Colorado. You have to choose the state either from the drop down box or by clicking on the graphic (if you know your geography), followed by clicking the orange Continue button.

7. Next you see a Progress Bar, some information about the process–including the claim that most people complete it within 15 minutes–and the first two questions.  Personally, I’m finding this interesting due to some similarities with our publishing site at Outskirts Press, which demonstrates in some ways that internet site best practices are not industry specific.

For instance, before our Version 4.0, we had a “progress bar” for the pre-production process.  For a variety of reasons, we removed it, but I’ve always wanted it back.   We also notify authors of how long the pre-production process will take, by saying “most authors complete it in X amount of minutes.”  In our case, we say it can be done within an hour.  That’s probably as realistic as Legal Zoom’s 15 minutes, but I digress.

8. The first question it asks is: Would you like to form a new corporation, or convert an existing business to a corporation, and the default answer is “Form a new corporation” which is the one I’m choosing.

9. You also get a chance to re-confirm your state again.  It may seem repetitive, but this is actually a trick of website design. What this site has done is introduced the process with the “fun” (and easy) exercise of clicking on a big map.  They could have just come straight to this text-intensive screen and not missed any steps, but their user-tests probably informed them that people seeing THIS screen first bailed on the entire thing.  People like clicking on graphics. They don’t really like reading websites.  This is why our Version 4.o website design at Outskirts Press has icons for every option/service we offer. But… I digress again.

10. Next question: What is the proposed name of the corporation? Please type it in EXACTLY as you want it to appear. (The name must end with “Corporation,” “Incorporated,” “Corp.” or “Inc.”)  – Here’s where you get one of the benefits of using an online service. They’re going to “test” the availability of your name.

11. It also asks for two different alternative names to the Proposed Name of the Corporation question it asked above.  Personally, I wasn’t prepared to have to have 3 total company names — I had a hard enough time coming up with one!   So I just attempt to hit the SAVE AND CONTINUE button without supplying any alternatives, and it works.  I guess if my name isn’t available, I’ll cross that bridge when it comes…

… to be continued…

Incorporating a small business on Legal Zoom – Pt 1

So you’ve decided to incorporate a small business and you’ve looked at all the available options for doing it and have selected an online service called Legal Zoom to help you with many of the formalities. Okay, me, too! So let’s do it…

1. Go to and click on Business Services from the main menu tabs and then choose Incorporation (S-Corp, C-Corp) from the sub-menu. You will see this screen:

2. Click the orange Get Started button.
3. Click the orange Get Started button again. Weird, but okay…
4. You’ll probably have to register as a new user to their site at this point…
5. Select the state that you would like to incorporate in. For some very brief considerations on that topic, read my previous posting here. (And for better advise, consult with a tax advisor or accountant).  Most people incorporate in the state they live in…

6. I’m going to select Colorado for my incorporation, so the remaining screen shots may vary slightly, but I’m assuming the general process and look of the site will be roughly the same… and we’ll continue here with the next posting…

Comparing Online Services for Incorporating a Small Business

Over the past several posts I’ve been blogging about incorporating a small business and have detailed the benefits of doing so followed by the general steps.  Not surprisingly, as the CEO of Outskirts Press, I believe using a professional online service to help you do something conveniently and easily is better than absorbing the learning curve of trying to figure out how to do it yourself.  It’s easier to go to a site and click  “ADD TO CART”  than it is trying to figure out how to register an ISBN, register a Copyright,  apply for a Library of Congress Number,  calculate the spine width of a book cover,  resample images to 300 dpi,  incorporate bleeds into a cover design,  format an interior in InDesign, and…..   Well, you get the idea. Sure, a writer could do all that herself, I suppose.    Why on earth would she want to?  Does she want to be a publisher, or does she want to be a published author?

I don’t want to incorporate businesses for a living. I just want one. So I’m going to find a service to help me, and to that end, I’ve found two comparison sites:

Compare Legal Forms

… and Top Consumer Reviews

Let’s look at only the services evaluated by both:

Compare Legal Forms also lists Incorporate, BizFilings, CorpNet, and Rocket Lawyer, while Top Consumer Reviews also lists The Company Corporation, My Corporation, My Law Daddy, and Corporate Creations.  If I were giving legal advice (which of course, I’m not, since I’m not a lawyer), I might recommend looking into all those alternatives, but for the sake of brevity, we’ll just compare the two options that are represented on both sites.

Compare Legal Forms doesn’t review the services, but rather lists their features. Top Consumer Reviews offers a review and a rating for each service it lists, and in their case, they consider Legal Zoom to be superior to My New Company.   I also happened to ask a CPA his opinion and he also recommended Legal Zoom, at least for me — your specific needs may vary. But that just goes to show, when possible, it’s always nice to hear or read what other people have to say, too.  For instance, we make our authors’ comments and testimonials readily available on the Internet (and we add 3 new ones each week) so anyone can review them by clicking here.

So… Legal Zoom it is… Stay tuned next week as I incorporate a business on Legal Zoom, step by step…








How to incorporate a small business

Yesterday we discussed the reasons someone might want to incorporate a small business. Today, we’ll outline the process.

How to incorporate a small business in 5 easy steps:

1. Determine the state of incorporation. Usually this is the state in which you reside and in which you plan to conduct your business. Sure, there are some long-term tax advantages to incorporating in states that have more advantageous tax laws, but unless you live in those states (Delaware is a favorite) then you have to qualify to conduct business in your state of residence anyway, which is kind of like incorporating twice.  Should it ever become valuable to consider the tax benefits, you can always incorporate in another state later, so right out of the gate, it’s easiest to incorporate in the state you live in.

2. Determine who will own stock. It’s easiest if that answer is “Me and my immediate family.” 

3. Check with your Secretary of State or Corporations Commissioner and the federal and state trademark registers to settle upon an available business name. You can find these sources via a Google search.

3. Prepare your Articles of Incorporation – These forms are state specific, but fortunately, the Internet has made it easier than ever to find the correct form. Here’s a handy-dandy map that allows you to click on your state and be taken to the appropriate form.

4. Complete your Corporate Bylaws – This online form service can help.

5. Files these documents with your state and pay the registration fee.

Not easy enough yet? No problem. There are incorporating services available on-line that promise to make the process of incorporating a business a snap (and affordable, to boot!)  Do they work? Stay tuned tomorrow as I compare some of the major players in Online Incorporations side-by-side and pick the one I’ll use to incorporate an actual business.

Certainly there is a correlation between this series of posts and our services at Outskirts Press.  Yes, I could incorporate my business by going to each government website individually and finding the proper forms and filling them out and doing everything manually.  But, instead, I’m going to opt to use an online service to make all that work faster and easier for me.  Am I going to have to pay for that convenience? Of course, but given the amount of time it would take me to learn how to do it all on my own, the convenience and knowledge that it is being done correctly is worth the cost to me.  The same can be said for self-publishing a book

Benefits of incorporating a business

Whether you are an author, run a small mom-and-pop shop, or act as an independent contractor for a larger company, there are many benefits to incorporating as a business entity yourself.  Here are some of the main benefits:


1 – You decrease your personal liability
2 – You can separate and protect your personal assets
3 – You limit your liability on business debts and obligations
4 – It’s easier to raise money for your business
5 – Creates “stock” which can be issued to investors for cash, which is more advantageous to you than seeking a loan from a bank
6 – Corporations are taxed at a lower rate than individuals
7- You can deduct normal business expenses from your taxes
8 – Corporations can deduct 100% of medical insurance premiums
9 – Helps you establish equity in a “brand name” since corporate names must be different in the same industry
10 – Helps establish credibility. Having an “Inc” after your name establishes you as an instant authority

Over the next several days, I am going to incorporate a business and I’ll walk you through the steps of doing it along with me… stay tuned…

Social media polls – looking ahead

Over the last couple of weeks we have held two different Web 2.0 polls on our Outskirts Press blog. The first poll determined that our clients wanted us to add a Social Media Market Research option to our growing selection of publication services. This option helps authors make the best, market-based decisions regarding their covers, titles, beginnings, endings, or marketing tactics, for example.

The second poll determined that our new and potential clients wanted us to offer a $300 “Mad Money” publishing promotion in October, which rewards new publishing packages with a $300 “line of credit” to use toward any pre-production service/option the author desires, including editing, professional custom cover design, Kindle edition, iPad edition, ghostwriting, or what have you.

But in both polls, the margin of victory between Choice #1 and the runner-up was fairly close. In the poll determining the next option we should launch, Market Research won by only 10%.   It earned 50% of the votes while the Featured Book-of-the-Week option earned 40% (author apps earned the remaining 10%).  And in the poll asking what promotion we should offer in October, Mad Money won by a margin of just over 1%. The instant 10% discount barely came in #2.

So while these polls helped us prioritize, the results certainly don’t prohibit the other options and other promotions from being offered. In fact, the Featured Book of the Week option’s showing with 40% demonstrated to us that it’s a highly-valued option also, so we are already working on it and will most likely have it available for our authors in October.   We’ve always known the instant 10% discount to be a valuable promotion, so we will more than likely offer that promotion before the end of the year as well.

The poor showing of the Author Apps option did surprise me, frankly. But, to be honest, it was also kind of a relief.  I was involved significantly in its pre-development here at Outskirts Press and now I feel confident re-prioritizing some of my other responsibilities and putting the Author Apps a little lower on the launch list, which will probably push it out to 2012 sometime.   I’m loving these author polls. They help us give our authors exactly what they want when they want them.  When you have so many things you WANT to do but a limited pool of resources with which to do them, this sort of insight directly from your  clients is invaluable.  

So if you’re a business owner, manager, entrepreneur, author, or other professional, I encourage you to start using polls on your blog or website, too.  They’re easy content, fun for your visitors, and provide you with actual useful feedback that validates your customers and helps your business.

Facebook Photo Banner for Promotion and Marketing – Part 1

Those of you familiar with the Facebook Fan pages know that with the redesign that Facebook introduced at the beginning of this year came a 5-photo “photo strip” along the top of every Fan page. Our Facebook page for Outskirts Press used that strip to showcase the “icons” for our five publishing services, shown in the screen shot below:

I’ve mentioned on this blog in the past how that photo viewer strip allowed for a more aesthetic “branding” opportunity. For instance, in our case, Outskirts Press is often associated with the gemstone graphics, so placing those five graphics along the top row of our Facebook page worked well.

The problem is that when anybody clicks on any of those graphics, what they see doesn’t really MOTIVATE them to do much more. See below to see what I mean.

Not terribly compelling, is it?  Next time we’re going to talk in more detail about how to modify those photo strip images so they work as promotional elements or advertising for the product or service your Facebook Fan page is about.