One thing to realize: If you Inc/LLC in 2008, you'll have to pay any taxes/fees due for 2008. Forming a DE LLC right now would cost you more money than waiting until Jan 1 and paying the $150 because you'd have to pay the $250 franchise fee for 2008. LLC on Jan 1 and you don't have to pay it for 2008. You're up $100 even with the $150 fee.
Last time they had this deal (a few weeks ago), there was an option to defer filing until Jan 1st, to save on 2008 fees and administration tasks. I assume you can opt to do so again.
Sorry, I'm new to this whole thing... what is the $250 franchise fee? Is it federal or state and is it required for ALL LLCs or just DE? I'm looking to incorp. in Michigan with a buddy of mine, is this going to to screw us come tax time? We probably wouldn't make ANY money until next year at the earliest, in fact we'd have losses (web hosting).
It's a state fee and it varies by state. It can go by different names in different states. (In MA an LLC pays an "annual report filing fee" of $500 a year.) It can be different for LLCs and corporations. (In MA corporations pay only a $100 filing fee. Apparently somebody in Massachusetts does not like LLCs.)
But this isn't necessarily a bad thing: all costs of incorporating can be classified as tax-deductible business expenses. Also, when you start a corp or LLC, you can technically choose when to start your business cycle for the tax purposes: that is, your fiscal tax year can be whatever you want, it doesn't have to coincide with standard calendar dates.
You can defer that payment for up to a a year (when you're hopefully profitable). Or, you can have your LLC taxed as a C-Corp and then you don't have to pay the $800 franchise tax like other LLCs.
