Do I Have to be Incorporated in Order to Operate a Business?

  
It is not mandatory in any state to be incorporated in order to run a business.  One of the main reasons for  forming a legal business entity is to safeguard the owner(s) personal assets.  An individual can run a business as a Sole Proprietor (SP), Limited Liability Corporation (LLC), C Corporation (C-Corp), or S Corporation (S-Corp). Two or more owners can run a business as a General Partnership (GP), Limited Partnership (LP), or a Limited Liability Partnership (LLP), or either a C-Corp or S-Corp as well.  Each type of incorporation offers different levels of liability, has different tax requirements and advantages, and requires different forms to be filed with the Secretary of State in the state in which the business is to be incorporated.

Because each incorporation status offers different levels of liability and corporate security – which are based on a company’s legal structure - it is best to seek the advice of an attorney and/or accountant before filing incorporation paperwork.  Although the local Secretary of State office cannot dispense advice, they can direct you to the best organization to address your concerns and needs before incorporating.

It is also important to review the requirements and limitations of the state that you plan to incorporate in.  Some states have lower tax rates and allow the business to run out of a different state as a Domestic Corporation, while some do not charge business sales tax and will allow a business to operate out of another state as well.  All states have websites, where you can do most of your research, acquire contact information, and download necessary forms for incorporation.  The best way to find a states website is to do a search on search engine sites like Google.com, Yahoo.com, or Ask.com.