by Deborah Sweeney, CEO of MyCorporation
2012 was not an easy year, but it is almost over and many are looking expectantly towards 2013. Among them are new entrepreneurs who, after riding out one of the most tumultuous economies in recent history, are thinking about starting their own business to ride what, we hope, is the coming recovery. As unpopular as this may sound, it might be a good idea to put your plans on hold for just a few months and opt for a delayed filing when submitting the paperwork for your new business. Now it may sound a little counterintuitive to keep the state from recognizing your company until the beginning of 2013, but there are three good reasons why you should consider doing just that.
1. Opting for a delayed filing will save you money
Expectedly, your business is going to have tax liabilities and burdens that it will have to pay. Pushing the effective date of recognition into the next calendar year means that you don’t have to worry about a couple of months of business at the end of 2012 when filing taxes. Fewer filings mean fewer trips to your accountant. And if you are going to incorporate or form an LLC, which I strongly recommend you do, delaying recognition also means you don’t have to pay the annual filing fee to your state for 2012 – depending on your business structure and the state you file with, that could save you hundreds of dollars.
2. Asking for a bit of time before the state officially recognizes your business gives you some breathing room to collect licenses and permits.
Depending on the type of industry you’d like to start a business in, as well as the state you file with, you’re probably going to need a business license, some permits, and some insurance. In fact, you’ll probably have to file for a few different permits; one to open a business in a certain location, to hire employees, to put up signage, to sell your product. It really depends on the local and state-level restrictions currently in place. And you need to be all squared away with the government before you can start up. The entire process can be extremely time consuming and frustrating, especially if all you are waiting for is a piece of paper saying you can open your doors to the public. A delayed filing will give you a few months to get all of your ducks in a row so that, when the state does begin to recognize your business at the beginning of the year, you can actually start doing business.
3. A delayed filing lets you skip the inevitable backlog of filings that accumulate at the beginning of the year.
There are a lot of potential business owners who put off filing their paperwork until the beginning of the year, whether out of ignorance of the delayed filing option or simply because they are looking for an excuse to procrastinate on the unenviable task of tackling a pile of paperwork. Whatever the reason, every year state offices everywhere end up getting buried in filings for new businesses. Inevitably a backlog develops, and everything gets delayed until the state can sort everything out. If you’d like the benefits of waiting until the beginning of next year, but don’t want to get stuck waiting for the state to sift through the rush, you should choose a delayed filing option. Essentially everything that can be processed early is, and then your paperwork is placed in a queue to be held for filing until on, or after, January 1st. You get all the benefits of filing in the New Year, without getting stuck in the January rush.
So, if you’re thinking of filing your paperwork in October, consider choosing the delayed filing option. Now it is important to note that each state is different, and some may not allow you to push your recognition date any more than thirty days into the future. Others will let you push it to three months later. So do your research, meet with a professional, and then decide whether or not a delayed filing is something you’d like to do. But, no matter when you file, we wish you the best of luck with your new business!
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