Before you incorporate.

If you just got your contractor license, or you're about to take the test, someone will offer to "set up your corporation" for you. Read this first.

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before-you-incorporate

Why I built this page

In my time working with business owners, I keep seeing the same pattern.

New business owners walking into my office with a corporation they didn't need. Not once or twice, but regularly. And when we talk about how it happened, the story is almost always similar:

They completed a course or program to get into their trade. Along with that program, they were offered additional services — help setting up a corporation, websites, marketing, and other things that sound useful when you're starting out. They said yes to the corporation piece, often without fully understanding what it would cost them over time.

The problem isn't the corporation itself. It's the timing. They incorporated at the peak of their motivation, before they had customers, before they had revenue, sometimes before they had a business plan. Then life happened. The motivation faded. Or the timing wasn't right. Or they discovered the trade wasn't for them.

But once you have a corporation, you're on the hook, whether the business generates a dollar or not:

The costs that don't stop

CA Franchise Tax (annual, guaranteed)$800/year

Corporate tax return preparation$700–$1,500

Statement of Information filing$25 every 2 yrs

Payroll setup + processing (to pay yourself)$500+

Registered agent + compliance$200+

Penalties + interest when filings are lateadds up fast

That's $2,000 to $5,000 a year, often with penalties and interest layered on top when someone forgets a filing deadline (which is common when the business never really launched).

None of the additional services offered to new business owners are bad on their own. But not all of them are needed on day one — and when they're bundled together at a moment of high motivation, it's easy to say yes to more than you actually need.

Ask yourself first

The 5 questions to answer before you sign anything

You need at least 3 YES answers before you should even consider incorporating.

Are you already generating $50K+ in net income annually?

Structure costs $2K–$5K/year to maintain. Below $50K net, the costs often exceed the tax savings.

Is your revenue predictable, not just one lucky month?

Structure locks you into ongoing compliance costs. If your income is inconsistent, Sole Prop keeps you flexible.

Do you have significant personal assets that need protection?

For most new businesses, general liability insurance and a solid contract handle 95% of the risk at a fraction of the cost.

Have you operated as a Sole Prop for at least 12 months?

Prove the business works first. If you incorporate on day one and it doesn't take off, you're stuck paying for a shell.

Can you absorb $2K–$5K in costs even in a slow year?

Franchise tax, corporate tax return prep, payroll setup, registered agent, compliance letters. None of it goes away when you have a bad quarter.

Your scorecard

3+ YES

Ready to explore structure.

Let's talk.

1–2 YES

Not quite yet.

Focus on growth first.

0 YES

Stay Sole Prop.

Come back in 12 months.

Not sure how to score yours? Let's talk.

15 free minutes on the phone. I'll help you decide if structure makes sense, before you spend a dollar with anyone.

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