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Starting your company
Incorporation / Incorporate / Form a Corporation

Incorporation / Incorporate / Form a Corporation

The question of whether or not to incorporate your business is one that most business owners ponder at some point. The reasons vary based on the size of your business, projected growth, and frankly how well you understand the process associated with forming a corporation.

What are the Advantages of Forming a Corporation?
Corporations are entities that are completely separate from their owners. One of the most attractive benefits is that you are not personally responsible for any debts or obligations your business may incur. Any personal assets outside of the umbrella of the corporation are protected from any lawsuits your business may be subjected to. Because corporations have been the entity of choice for hundreds of years, there is plenty of case law supporting their liability protection and that's great news for you! 

Points to Consider:
Because every business is different, we highly recommend you speak with your tax professional prior to making any decisions regarding forming a corporation. All information contained herein is for informative purposes only and in no way should be considered professional advice.

Personal Liability Protection:
Any creditors, collection companies or lawsuits filed against your business can’t affect you personally. 
Flexible Tax Returns:
Corporations are automatically taxed as such, however you can elect S-Corporation status and choose to take advantage of pass-through taxation for your business. Again, it is imperative that you speak to your accountant to garner a better understanding of the tax benefits associated with forming a corporation.
Hundreds of Years of Case Law:
While LLC's and other entity types remain relatively new and unproved in most states, Corporations have been around for hundreds of years and offer relatively few surprises when they are challenged in court.
No Ownership Restrictions:
You can have as many owners as you wish. They can be foreigners or even other entities! However, we caution you to consider who is best suited for the position very carefully. Remember, you are granting an ownership position in your business and that is a decision that needs to be made with the utmost care.
Free Transference of Ownership:
You can transfer your shares in the form of “stock” as often as you wish. Corporations offer the most flexibility when it comes to transferring shares. If you ever wondered why so many public companies are corporations, this is part of the reason why!
Unlimited Life-Span:
While other entities such as LLCs and limited partnerships have limited life spans, corporations automatically exist in perpetuity until they are dissolved. This is completely independent of the life span of the corporation’s initial owners. If you’re looking to build a legacy, forming a corporation may be your best bet to protect what you have built.
You Can Pay Yourself:
Corporations allow the managing owners to pay themselves tax-deductible paychecks like all other employees. This is a great way to avoid the self-employment tax that you would be subject to under other entity types. You can also offer yourself tax-deductible fringe benefits such as direct reimbursement of medical expenses. Since these aren’t considered taxable income to the employee, these fringe benefits are essentially tax-free. This aspect is of critical importance but you must be certain that you understand the process and keep all business income separate from personal income generated from other sources. is ready to assist you in filing your corporation. So, contact your accountant to determine which type of corporation is right for you and how we can best serve your needs. Then simply contact one of our professionals to get started!

Page updated on 2015-09-15

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