Setting up an LLC or corporation in the U.S. can be a daunting ask, especially for new independent business owners. Given my legal background, I was all too aware of how involved and costly this process can be. Thankfully, I discovered a way to quickly and seamlessly form an LLC for my travel blog and coaching business without having to return to the U.S. from Taiwan and cough up for one of my erstwhile colleagues. Because, you know, law school never teaches us how to do this...
However, law school DID teach me to remind you that this article does not constitute legal advice and is for educational purposes only :)
Read on to learn the ins and outs of incorporating or forming an LLC in the United States, and how I formed mine from abroad without spending a fortune on legal fees—and did so within minutes.
Disclosure: The following may contain affiliate links that, at no additional cost to you, may earn me a small commission.
What does it mean to "incorporate" or "form" an LLC?
In legal jargon, to "form" a business means to establish it as a limited liability company (LLC), a limited partnership (LP), or partnership, whereas to "incorporate" a business means to establish it as a corporation. (Below, I'll explain the difference between the types of business entity most relevant to bloggers, coaches, and small business owners). In the business world, however, people commonly use the term "incorporate" to refer to starting not just corporations, but also other business entities like LLCs.
In the general sense used in business (rather than law), to "form" or "incorporate" an LLC just means to register your business as an LLC with the government. In the United States, you do this at the state level. In most states, you'll need to file a document called the "articles of organization" or (more rarely) "certificate of formation" with the state agency responsible for business filings. This document will call for your business's name, address, purpose, management structure, contact information, and duration as an LLC. Once the state approves a new business's filed documents, it's officially incorporated an LLC and gets a certificate to prove it.
Why should I incorporate my blog or overseas business?
If you're a digital nomad and solopreneur like me, you might be wondering why you should bother incorporating your business when you could spend that time creating content or finding clients instead. But incorporating your business will actually help your business grow and prosper in the long run, for a number of reasons.
Legal protection. Incorporating or forming a business entity gives it legal protection under the law of the state where it's registered. For example, if your business is incorporated, other businesses won't be allowed to incorporate under the same business name. Corporations and LLCs (but not LPs or partnerships) get the special legal protection of limited liability, which protects your personal assets in case of a lawsuit. So, if someone sues you, they can only sue you up to the amount you initially invested in your business. Your personal savings and property are off limits. And, in the event that your business falls into debt, your creditors will only be allowed go after the business's assets to pay it off, not your personal savings and property.
Tax benefits. Incorporated businesses are eligible for various tax benefits. Depending on the country and the type of business entity, these benefits can include deductions on business expenses (such as advertising, travel expenses, or startup costs), lower tax rates, or the ability to split income between the business and individual shareholders.
Image factor. Incorporating your business will give it a professional and credible brand image, and the importance of brand image should not be underestimated. Forming a business entity is a serious commitment, so taking this step will help you gain the trust and respect of current and prospective clients, customers, investors, or collaborators.
Which business structure should I choose?
Many solopreneurs operate as "sole proprietors," which means their business is not incorporated. This keeps your business structure simple and flexible, and allows you to pay taxes solely as an individual and deduct business expenses on your personal tax returns. The downside, though, is that you'll personally be on the hook for business debts and legal liabilities, and have limited opportunity to secure funding and attract investors. That's why I recommend small business owners—including lone operatives like bloggers and coaches—get incorporated in some way. The right kind of business entity depends on factors like the size of your business and your goals for growth. Let me share some of the pros and cons of each.
As mentioned above, corporations are afforded limited liability protection. To recap, this is where business owners are protected from losing their personal assets (like their car, home, or personal savings) to pay their business's debts or legal judgements. On top of that, in some countries corporations pay lower tax rates than other business entities. However, corporations are subject to double taxation, where both the business and shareholders pay taxes on earnings. This means business owners have to pay taxes twice on the same income, which is far from ideal for small businesses and independent creatives.
In the U.S., businesses with fewer than 100 shareholders also have the option of registering as "S corporations." These are like corporations but with "pass-through taxation," where the business's income, losses, deductions, and credit are passed on to the shareholders for federal tax purposes rather than remaining with the business. The S-corp model lets small business owners avoid being taxed twice on their corporate income while still getting the benefits of being a corporation. However, it also limits your ability to attract investors due to the cap on number of shareholders.
Alternatively, you can consider forming an LLC, which is now the most popular choice for new private businesses. Like S corporations, LLCs combine limited liability protection with pass-through taxation. This is the business structure I've chosen, as it provides me with the flexibility to manage my business my own way while enabling me to sign contracts with U.S. attorneys, use high-caliber payment technology like Stripe, and gain certain U.S. tax benefits.
Do I need to pay a lawyer to incorporate or form my LLC?
I often hear from clients that they'd love to incorporate their business, but just can't afford all the legal fees. Fortunately, there's now a tech alternative in the legal space that lets you form a business entity without paying a lawyer outrageous amounts to sort it out on your behalf. I'm talking about Firstbase, an online platform that automatically generates the legal paperwork needed to form a U.S. business from anywhere in the world at an affordable cost. It also provides access to tax experts, lawyers, and all the documents related to your business entity.
Using Firstbase let me form my LLC painlessly, affordably, and in literally five minutes. The first thing Firstbase helps with is getting your Employer Identification Number (EIN), which companies use when filing federal taxes and opening bank accounts. Prices start at $399 USD, and Firstbase takes care of all the forms for you (specifically, Form 8821 and Form S-S4, which allow them to submit and track the status of your EIN application). Firstbase is an authorized third party for expedited EIN services, so you can expect to receive your EIN within days of filling out the onboarding form.
Even before you receive your EIN (i.e., Employee Identification Number), you can take advantage of the site's full integration with digital banking partners to set up a company bank account via an automatic application. And after your company is incorporated, Firstbase will prepare self-serve tax forms (namely, Form 5472 and Form 1120) and the necessary legal documents for your business entity.
In addition to business registration, Firstbase also provides an all-in-one business compliance service for $99 USD per year per state, plus a US business address for a one-time $35 USD fee. Since using the site to form my LLC, I've continued to receive access to deals and promotions with Firstbase's partners, plus access to the startup scene and advice on business growth.
How do I form my LLC or incorporate my business online?
To register your business online via Firstbase, just go to this webpage and click on "Start my business." The onboarding form will ask for your company type (LLC or corporation), state of registration, and company name and industry. The form includes information on the different business types and states available to help you decide which one is right for you. If you need further guidance, you can use the site's 24-hour live chat to get answers to your questions. Let me show you each step...
First, you select a company structure.
If you're not sure which one to choose, you can take a survey that the site uses to generate advice catered to your business's situation.
Next, Firstbase will recommend the best state to incorporate or form an LLC in.
After that, you add your company's name, entity ending (e.g., LLC or Limited Liability Company), and industry.
Next, you'll be prompted to review your company info and pay to get your business registered with the details provided. Firstbase guarantees a full refund within 60 days in case you're unsatisfied for any reason (though I doubt that'll happen!).
Once you've made your payment, you can add further company details (such as the ownership and shareholders). Finally, you'll need to sign the legal documents Firstbase draws up for your business entity. Firstbase can then complete the incorporation process on your behalf.
I hope I've helped demystify the incorporation process for other entrepreneurs, and that you feel inspired to form an LLC yourself!
Even when it comes to the startup scene, the business world has historically been elitist, with gatekeepers like corporate lawyers keeping out new players with all but the deepest pockets. Fortunately, companies like Firstbase are democratizing the entrepreneurial space by bringing down startup costs and automating legal tasks that may be unfamiliar to new business owners. Firstbase makes legal help and financial infrastructure accessible to new business owners regardless of their resources, and helps entrepreneurs all over the world incorporate in the US and join a global network of visionary startups.
Even if you're on the fence about incorporation, it's worth it to check out Firstbase's tools, resources, and integrated solutions for new businesses. The company is really lowering the barrier to entry for new entrepreneurs, and its pricing, services, and speed leave traditional corporate lawyers in the dust!