Corporation Formation

What Does it Mean to Incorporate?

Incorporation means turning your sole proprietorship or general partnership into a company formally recognized by your state of incorporation. When you incorporate your company it becomes its own legal entity. When you incorporate your business, it becomes its own legal entity and you’re legally separating it from yourself and officially giving it a separate legal identity. Moreover, incorporating often has more credibility with potential customers, vendors and employees.

As you may know by now If you are not incorporated, you as the owner of the business, personally own the assets of the business. Even more importantly you are liable personally for all of the business debts which means that if you business fails, your personal assets such as your car, house and bank accounts are all at risk. Therefore, if you decide to incorporate your business you will protect your personal property and assets depending on whether you form a corporation, LLC or other various entity. Once you are incorporated with your corporation or LLC you will only be personally liable for amounts owed by the business up to the amount you have invested in the business. Beyond your invested capital, you will have no further personal liability for the settlement of debts owed to your business’s creditors, unless you have signed a personal guarantee.

How Does Incorporation Work?

The steps to incorporate are simple. There are various types of corporations such a C corporation or S corporation. In addition, depending on the type of business you are operating you may want to form an LLC – limited liability company. Here are some of the steps included in the process:

1. First, decide which form of corporation or LLC type is best for your business and goals.

2. Consult with us and/or your accountant to make sure the entity formation is the right one for you.

3. Determine who you would like the directors of the corporation to be or who the members/managers of the LLC will be.

4. Select a registered agent. Your registered agent must be listed on your Articles of Incorporation or Articles of Organization. The registered agent is appointed by you to receive important legal and tax documents on behalf of your business and forward them to you. Panel of Paralegals & Associates includes this service in all incorporation packages.

5. Prepare and file the Articles of Incorporation or Articles of Organization per instructions from the Secretary of State’s office. We will handle this step for you, allowing you to concentrate on running your business.

Other Reasons Why Incorporation is Important?

Aside from the obvious reasons of shielding against liability, Incorporating your business also provides your business with the ability to obtain long term financing. Thus, you are more suseptable to obtaining loans from the Small Business Association

Transferring ownership of you business also becomes easier once you incorporate as you are now a legitimate entity that could be potentially sold if needed. In addition, Valuation of your business is easier when your personal assets and liabilities are legally separated from those of the business. By incorporating your company becomes simplified.

Finally, business tax rates are much lower than personal tax rates. There are some issues of double taxation to consider though. Whilst there may be tax benefits, there will be some additional legal costs and administration costs associated with being an incorporated company to consider.

Contact Us Today!

Call us today to discuss the various options you may have and how to protect your personal assets by creating a successful incorporation plan to make sure your future prospers without the headaches of business liabilities. We offer free consultation and could assist you with all your questions. We will go over with you the fees associated with filing the documents. In addition, we could form your corporation back to you filed within 48 hours. Yes, 48 hours!

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