Creating a corporation could be a critical step in safeguarding yourself from corporate obligations and debts, as well as liability for corporate actions. Incorporation may be perfect for small businesses since a single incorporator may only be necessary to file an application with your state.
Besides personal asset protection, there are many other benefits to small business incorporation, which includes:
● Enhanced credibility as well as the capability of raising investment capital: A corporation might be more appealing to new investors, particularly because of the limited liability and ease of share transfer.
● Transferability of shares and unlimited life: Unlike a proprietorship, the life of a corporation may indefinitely go on, without having to be dependent upon the life of an individual(s). Also, shares might be sold or transferred to another member of the family without the tedious and costly process of divesting yourself of ownership, like in proprietorships.
● Incorporation tax benefits and tax flexibility: In order to avoid double taxation in a C corporation, a business owner may operate underneath subchapter S of the Internal Revenue Code. S corporations allow income to pass through to their shareholders.
If you’ve made the decision to incorporate your small business, it’s a great idea to consult a skilled business lawyer. Doing so could not only save you valuable time, but will also help ensure that you do not miss any important details or requirements in your state’s laws. Also, a business lawyer may assist you in deciding which kind of corporation is more appropriate for your business (e.g., LLC, C Corp, or S Corp).
Reasons Not to Incorporate
It’s vital that you weigh the upsides and downsides of incorporation before you decide to move forward. There are some reasons people might not want to incorporate their small business, which includes:
● Directors and owners must follow outlined formalities, as well as the corporation has to hold meetings on an annual basis.
●Filing fees and annual fees vary depending on the type of business structure you set up.
Peace of mind is crucial, and a business attorney like the ones at LifePlanLaw.com – Blackburn Law Firm, PLLC may assist in streamlining the process of incorporation and make sure that no details are missed.