If you are starting a new business, and decide to create a corporation, your business will be a legal “person” under the eyes of the law. Among the ways it will be treated as a person are that it can be named in a lawsuit, own property, and be taxed.
What are the Benefits of a Business Incorporation?
Two of the primary considerations when deciding whether to incorporate are the treatment of taxes and liabilities:
- Taxes: Unlike a partnership, taxes do not flow through to the owners of a corporation. Instead, the corporation is taxed based on its profits
- Liabilities: Because the corporation exists as an entity separate and apart from the owners, owners are protected from personal liability for any obligations of the corporation. Instead, if the corporation is found liable for any debt or obligation, that liability can only be satisfied from the corporation’s assets.
Additional advantages of Business Incorporation include:
- Established federal and state legal precedent as to the treatment of the entity;
- Ease of raising capital through the sale of securities
- Unlimited life
- Straightforward transfer of ownership through transfer of shares.
While Business Incorporation comes with many benefits, there are also some drawbacks to consider, including:
- Increased administrative burden of running the company, including holding annual meetings;
- More expensive to create; and
- Additional paperwork and filings required with the state, including annual fees.
Missing even a small detail in your filing can slow down the Business Incorporation process and cost additional expenses. Contact us now to find out how we can assist with your Business Incorporation.