Starting my own company?

Great step!

Sonal,

We just finished incorporting a company after researching this subject for 9 months!!. I can try to help as much as possible.

When myself and my husband started thinking about starting a company, there was no place we could go for advice/tip specific to Indians. All we could find were the standard information that would be mostly relevant for Americans. We had to spend hours trying to figure out things on our own. So, lets make this thread comprehensive and useful for fellow ladies/couples who might be considering this path in future.

My first question to you is ..
"Why do you want to incorporate?"

Can't you achieve your objectives without incorporation?

 

request

hi sonal,
i read ur post...u doing good work....
i completed Bachelor Degree In Computer,If you want any help related to programming i will help you.....as volunteer .....i just want to help u.
nilam

 

What form of company?

Sonal,

The reason we registered a company was for slightly different reason. Looking at your needs it appears that you need to register a company.

Now you need to decide what "form" of a company you want to incorporate:

a. A Corporation or
b. A LLC (Limited Liability Company)

The big difference between both is that if you form a corporation, you pay taxes at the company level. If you form a LLC, you pay taxes at the individual level. LLC has a less formal reporting requirements compared to a corporation. Raising capital from others, transferring ownership, adding investors etc are easier with a corporation.

Depending on your situation, you need to decide on a form of incorporation before proceeding further. Unless you have strong reasons for starting an LLC, most people prefer to register a corporation.

Indira.

 

Indira, can you explain the above? I am not able to understand. Thank you for your time.

S

 

Difference between incorporation and LLC.

Hi Sheetal,

It is easier to explain with an example.

Lets us say that you are working in big company earning a good salary. You also have a company on your own through which you do consulting work as secondary income. During a year, lets say you made a salary income of $50,000. In the same year, your company made $25000 profits.

Assume that corporate income tax is 20% and personal income tax is 25%.

If you have formed your consulting company as a corporation, then taxes will work this way.
$25,000 - 20% = $20,000 (After corporate tax)
($20,000 + $50,000) - 25% = $52,500 (after personal tax)


If you have formed an LLC, then taxes wil work this way..
(25,000 + $50,000) - 25% = $56250 (after personal tax)
As you see, there is no corporate tax. Profits made by your LLC is passed through to you and you pay personal income tax on it.

One is not always better than the other. Which is better depends on your tax situation.

Indira

 

Which registering company?

Hi Indira,

Thanks for taking the time to provide a numerical example. We are now pretty close to making a decision and think that we need to incorporate a company here in the US. Can you please tell which company you used for incorporation and how was your experience?

 

MyCorporation

Hi Sheetal,

Yeah, absolutely. We used MyCorporation.com for registering our company. They were very professional and thorough. The website is pretty self explanatory on everything you need. They also have an online tool that will provide you estimates and you can decide for yourself which service to add and which one to drop.

I would take the service of asking mycorporation to obtain the Federal Employer ID Number (not just prepare). It is one less headache that you need to deal with and pretty affordable too.

Let me know if you need further help. Best of luck!

Indira