- Standard filing. This is basic filing for small businesses. Entrepreneurs complete an application specific to their entity formation, pay a filing fee, and submit these documents to their local Secretary of State. These materials may be submitted online or through the mail. Standard filing processes incorporation paperwork in the order in which it is received, so it might be several days, or weeks, until the business receives its official incorporation status.
- Expedited filing. This option allows entrepreneurs to submit their application documents to the Secretary of State and pay a slightly more expensive filing fee. This fee prioritizes their paperwork to be filed a bit faster with the Secretary of State. Generally, this means no more than a few days wait time for both online and mail-in documents.
- Delayed incorporation filing. A delayed incorporation filing means that an entrepreneur gets to pick the effective date that their company is officially in business. Usually, small business owners will choose to file their incorporation paperwork at the end of the year — which may actually be the best time to incorporate a business.
Benefits from Delayed Incorporation Filing
Why is the end of the year the best time to incorporate a small business? The new year offers more than a fresh start to launch a startup.
Get to the Front of the Line
There is a narrow window of time left to incorporate a business in 2020. Attempting to squeeze in an incorporation during the final two months of the year is difficult for most businesses. Many Secretary of State offices receive a great deal of paperwork for incorporating (including as a C Corporation) or forming an LLC during these months. Often, there may be such a high influx of paperwork that it causes offices to become backlogged. As a result, they often complete incorporation paperwork in the order in which it is received and may not be able to fulfill every standard filing application until 2021. This leaves entrepreneurs in the lurch, not knowing exactly when their paperwork will be received and filed by the Secretary of State.
Tailored Funding Options for You
Delayed incorporation filings, however, give entrepreneurs the chance to cut ahead in line. The date for a delayed incorporation filing may be set 30 to 90 days out into the future. This allows you to reserve the date in the new year. Don’t forget to mention which date you wish for your business to be effective on your delayed incorporation filing application.
One more pro tip. Check in with your Secretary of State to ensure they allow delayed filing requests. States like California, Texas, and Florida allow delayed filing requests, but this is not true of every other U.S. state. If your local Secretary of State is not one of the aforementioned three states, contact them to see if you may be allowed to submit a delayed filing.
Set a Significant Start Date
One of my personal favorite things about a delayed incorporation filing is that your incorporation date can have a significant meaning to you. The date you start a business may be baked into the narrative of your company.
For example, if you open a bakery in honor of your grandmother who was an avid baker, you may set the delayed filing date for her birthday. You may also choose a date that commemorates another personal achievement, like the day you graduated from college, or choose a day significant within your industry. This special day can very well be the same day that you choose to open your doors for business.
Prepare for When You’re Officially in Business
Setting an effective date of business gives entrepreneurs the chance to get caught up on other aspects relating to their small business. Some of these may include, but aren’t limited to, the following:
- Registering a trademark for names, logos, and designs that are unique to the business.
- Obtaining an employer identification number (EIN) in order to hire employees and open a business bank account.
- File for business licenses that allow you to conduct operations in your industry, county/city, and state.
- Designating a registered agent to ensure there is a proper point of contact between your business and the state to receive necessary paperwork.
- Taking care of miscellaneous small business needs, like reviewing your business plan, filing for a business loan, renting or leasing a brick and mortar space, working on advertising and marketing materials, creating a website and social media handles, and much more.
Let’s say that you decide to expedite your business filing for 2020. If the business has an effective date for this year, you’ll need — in addition to completing everything listed above — to fulfill the annual maintenance required for your entity formation. Your business will also be liable for paying taxes for the year that it is in business. This is true of every year you are in business, even if it has only been in existence for a month.
If that sounds like a lot to juggle in the remaining months of 2020, don’t worry. A delayed filing that sets your effective date in advance will give you enough time to prep your business and provide peace of mind in knowing you can launch fully ready to make 2021 your year.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Twitter @deborahsweeney and @mycorporation.