Why You Should File Incorporation Forms Early
When you form an LLC or start a business of any kind, it’s important to do a trademark search for the name of your business and be aware of deadlines for filing incorporation forms. If you have a great business idea and a catchy, memorable name in mind for your business, filing business forms early can help you stay ahead of the competition and avoid any possible pitfalls when you get your business up and running. Conversely, in a worst-case scenario, choosing the wrong business name or failing to file incorporation forms can result in your business being subjected to a trademark infringement lawsuit.
Filing Business Forms Early: Learning the Hard Way
One example happened a few years ago, as described in the Wall Street Journal: Kori Stanton was a new entrepreneur who started an online cookie business. Her business was thriving and already showing great potential for growth — she had even been featured on the “Rachael Ray Show.” However, after getting national publicity for her cookie business, Stanton discovered that another company already had a similar name to the one that she had chosen for her business — and this other company threatened to sue her for trademark infringement.
In the Wall Street Journal article, Stanton described how her business name became a legal liability: when she was first starting her business, she checked to see if a website URL for her chosen business name was available, and it was. Because she had been able to purchase the URL for the business name she wanted, Stanton assumed that the business name itself was also available and there wouldn’t be any problems.
However, once she was threatened with litigation by the other similarly-named company, she changed her company’s name to e. e. cookies. Although she avoided a lawsuit, this situation still caused a costly financial loss for her fledgling business: she had to write off $11,000 of marketing materials with her old business name that were no longer usable, as well as extra incorporation fees. Stanton told the Wall Street Journal: “It was very discouraging. I felt like I had to start over.”
Even if an entrepreneur does not intend to infringe on anyone else’s trademark or intellectual property, choosing your business name is a critical step that can be a little risky. If you accidentally choose a business name that is already taken — or even one that is too similar to an existing business’ name — your company might be vulnerable to a lawsuit.
The story of Kori Stanton is a great cautionary example of why filing business forms early is so important. There are several reasons why you should file incorporation forms as soon as possible once you decide to start your business.
Here are some of the biggest benefits of filing incorporation forms early:
Lock in Your Choice of Business Name
If you have a great business idea and the perfect business name, it’s important to get both of them officially on file with your regulatory authorities. Filing incorporation forms early is an ideal way to make sure your chosen business name is “official” before your competition can snap it up.
Especially if your business is in a fast-moving industry or a crowded market, it’s crucial to get ahead of the competition by filing your business forms as soon as possible. After all, you never know who else is working on a similar business idea at this very moment.
Avoid Trademark Infringement
Filing incorporation forms early can also provide protection against legal action. Not only will this help you avoid the costs of a lawsuit, but it means you’ll avoid the costs of re-filing your business forms and creating new marketing materials with an updated business name.
Before you make your name official, make sure to carry out a trademark search to ensure it’s unique — a simple Google search or finding an available URL isn’t enough. If you’re not sure where to start, Incfile offers a trademark search and registration service that will help you find and secure a name that’s all yours.
Enjoy Peace of Mind
Finally, filing your business forms early gives you peace of mind. With your forms submitted and your business officially a “legal” incorporated entity, you can rest assured of several facts:
- Your personal assets are protected as separate from those of the business
- You can benefit from various tax advantages as a business owner, including the ability to deduct business expenses
- You can focus on actually running your business and making a profit instead of worrying about business forms and trademarks
Starting a business is an exhilarating time, with lots of exciting things to think about and new ideas to pursue. Sometimes new entrepreneurs get caught up in the rush of doing all the important things that they’re most excited about, and they forget to do the basic ones like filing incorporation forms. Don’t delay this essential step! Filing incorporation forms early can help get your business up and running, give you an edge on the competition, and protect your business from big risks.
Are you ready to start a business, form an LLC or search for and secure the perfect business name? Talk to Incfile today! Our incorporation experts can help you evaluate your options with state-specific advice.