How to Incorporate an Investment Business


Incorporating an investment business can be quite beneficial for the owner. Some of the key advantages of incorporating your investment business include reduced taxes on dividends, reduced capital-gains tax rates and increased business deductions. In addition, personal assets are protected and it is much easier to raise capital. Online legal services make it very affordable and easy to incorporate your investment business.

Things You'll Need

  • Proper legal documents
  • Decide the main location where you will be doing business. It is important to know in which state you will be operating because that will impact what types of state regulations will apply. For example, assume you incorporated your investment business in Oregon and then a huge opportunity arises in Indiana. Oregon has a special franchise tax fee for corporations but Indiana does not. The problem is that if you dissolve the Oregon Corporation and form a new one in Indiana, you would lose your track record history, which would adversely impact getting business lines of credit. The solution, if you anticipate possibly moving to other states, is to incorporate in Nevada as a foreign register, because you have the freedom to move around the country and it is the most tax-friendly state for corporations.

  • Select a name for your investment business corporation. Make sure your selected name is not already being used. When you find your unique name, register it as Doing Business As (DBA). Online legal services will do this name registration for you. In addition, make sure to acquire an Employee Identification Number, which is commonly referred to as an EIN, as it identifies your role in the investment business.

  • Determine which service you will use to file your investment business corporation. There are hundreds of online legal services out there, with one of the most popular being Use one of the many online sites that offer business incorporation as part of their discount legal services, and select a site that offers testimonials. For an investment business, it is best to incorporate using the S corporation structure because you deduct all losses without limitation, gains are treated as ordinary income, and you can bypass the wash rules that do not allow you to recognize losses on identical investments. In addition, unlike a C corporation structure, you are not taxed twice on investment business profits.

  • File the formal incorporation documents. The information you will need to furnish includes: Name of Corporation, desired State of Incorporation, Shareholder Names, Officers' Names and Registered Address. When you are using an online legal service it will guide you through this process and produce all the necessary documents, like the articles of incorporation and the bylaws, and apply for federal/state identification numbers as well as formally file them for you.

  • Start operating your investment business under your new corporate structure.


  • Streetwise Incorporating Your Business: From Legal Issues to Tax Concerns; Michelle Cagan; May 2007
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