| The first question to a budding businessman or woman | | | | from putting into practice a decision that may be |
| is why you should incorporate your business in the first | | | | harmful to the organization. |
| place. Can you run a successful business without | | | | Reasons For Not Incorporating Your Business |
| incorporating your business? Of course you can. The | | | | There are downsides of incorporating a business as |
| main reason for incorporating your business is to | | | | well. They may be fewer in number but are not less |
| protect your personal assets against a business liability. | | | | significant. The reasons for not incorporating your |
| If your business gets into a debt situation and only | | | | business are the following: |
| liquidating assets seems to be the way out, your | | | | Incorporating a business requires a huge |
| personal assets will not be touched if you have | | | | amount of paperwork and records than sole |
| incorporated your business. | | | | proprietorship. Also, each state has its own laws for |
| You can rest assured that your home, car or personal | | | | incorporating businesses to ensure stability and |
| assets will not be seized if your business has been | | | | strength. Your may not be ready to do all that. |
| incorporated. However, incorporating your business is | | | | Costs of setting up a corporation are also |
| not entirely a very happy scene. Why? Read on to | | | | high compared to the other business structures. |
| learn about it. | | | | If your profits are not very high, you will miss |
| Before we discuss the merits and demerits of | | | | out on all the tax benefits of running a corporation. |
| incorporating your business, let us learn about the | | | | With advantages and disadvantages of incorporating a |
| different types of corporations that your business | | | | business clearly stated, say you do want to |
| could register as. | | | | incorporate your business. Now the next important |
| Types of Corporationso General Corporation - this is | | | | question arises. Where do you want to incorporate |
| the most common type of corporation. It consists of a | | | | your business? Your hometown is the best place to |
| number of stockholders and the corporation as a legal | | | | incorporate your business. However, it has merits and |
| entity, is owned by them. The stockholders are | | | | demerits to it. |
| protected from the creditors of the business. The | | | | Merits of incorporating your business in your |
| stockholders are responsible only as far as the | | | | hometown:a. The simplest thing to do if you plan to run |
| investment to the business.o Close Corporation - this is | | | | your business only in your stateb. Do away with filing |
| similar to General Corporations except in the number | | | | annual reports of your company in more than one |
| of stockholders. In a close corporation, the number is | | | | statec. Costs involved are less if you incorporate your |
| limited to 50. The shares of the company are first sold | | | | business in your own state |
| among the existing stockholders and only then sold to | | | | The best states to incorporate your business are |
| new stockholders.o S Corporation - this type of | | | | known to be Delaware and Nevada. |
| corporation is a slight modification of existing | | | | Why do people choose Delaware for incorporating |
| corporations. It includes a certain tax designation | | | | their business? |
| granted by IRS to existing corporations.o LLC (Limited | | | | With more than 700,000 companies choosing |
| Liability Corporation) - this type of corporation seems | | | | Delaware as their legal home, it has rightfully earned |
| to be a better form of corporation than a partnership | | | | the title "Incorporating Capital of the world". |
| or an S corporation. This is because it combines | | | | Delaware General Corporation Law is the |
| protection of personal assets and tax advantages | | | | most advanced and the most flexible business statute |
| without IRS restrictions | | | | in the continent |
| Reasons To Incorporate Your Business | | | | The State Government is pro-business and |
| If you are planning to start a small business, there are | | | | friendly |
| many reasons why you should incorporate your | | | | Costs to incorporate in Delaware is one of |
| business. | | | | the lowest in the country |
| The reasons, as stated by experts, are as follows: | | | | The business Court of Chancery has |
| Reduce personal liability - if you run a sole | | | | authored most of the modern U.S. incorporation law |
| proprietorship, all your personal assets are liable to risk | | | | Why do people choose Nevada to incorporate their |
| in the case of any business debt. But if your business | | | | business? |
| is incorporated, your personal assets and business | | | | No corporate income tax on corporate |
| remain two distinctly separate identities. Your personal | | | | shares |
| assets will not be affected if your business incurs any | | | | No franchise tax and no personal income |
| debt. | | | | tax |
| Save tax - corporations have to pay less | | | | Minimum annual fees |
| tax than individuals. If you are incorporated, insurance, | | | | Stockholders are not made public and |
| entertainment and travel all become tax deductible as | | | | directors need not necessarily be stockholders |
| business expenses. | | | | Stockholders and directors may not reside in |
| Enhance credibility - LLC or Inc after your | | | | Nevada or need not be U.S. citizens |
| company name puts you in good standing to potential | | | | You have quit your job, as your head is full of |
| customers and vendors. It legitimizes your business | | | | entrepreneurial ideas. You want to start a business. |
| potential. | | | | Apart from choosing the market and the product, the |
| Assurance of continuity - corporations | | | | first thing that you need to think about is incorporating |
| indicate continuity beyond an individual or owner. The | | | | your business. What is incorporating a business? What |
| company does not shut down with the death of the | | | | are the advantages and disadvantages of |
| owner. | | | | incorporating your business? Is incorporating your |
| Investor friendly - corporations attract | | | | business area specific? All such questions have been |
| investors through stocks. Investors will buy stocks only | | | | dealt with in this article. |
| if they see the company is incorporated. | | | | Once the skeleton of your business is ready and the |
| Quick transfer of ownership - corporations | | | | launch pad is set, the only thing left to do is to |
| can switch owners only with sale of stocks. | | | | incorporate your business. That is, if you want to |
| Share responsibility - no single partner | | | | incorporate your business. Incorporating your business |
| decides on company rules and policies. Every partner | | | | means your business name will become a Limited |
| takes up responsibility. This protects the company | | | | company or a LLC company, Inc. etc. |