Business Incorporation - Why It Is Necessary

By Amy McDaniel  

When starting a business, the first step should always be to first determine the best ways to protect yourself and your assets from being lost due to unforeseen problems and challenges that could come up when operating a business.

The first and most important step is business incorporation.  Business incorporation involves setting up a separate legal entity to be the operator of the business.  You can be an owner of the entity and you can also be actively involved as a director, officer and agent of the business. When you incorporate, it is the corporation that is party conducting the business.  When you are representing the business, you are acting as an agent or employee.  What this does is it creates a layer of protection between you personally and the business activity.

It is business activity that can give rise to liability.  Lets say your business enters into a supplier contract and there is a dispute.  Or, another example might be if your business has a store and someone slips and falls.  Or, say you have a rogue employee who sues the business for wrongful termination.  In all these cases, the party that needs to address the dispute is the legal entity business.  Without business incorporation, it would be you personally who would be the target of the problems.

And, if in the end of any of these kinds of disputes, you are found liable, then your personal assets are at risk for making good on the liability.  On the other hand, if you run your business through a separate legal vehicles such as a corporation or a limited liability company, then it is the company's assets that are at risk- but not your personally.

Because business disputes and challenges are inevitable in almost any entrepreneurial venture, this protection is so important.  Furthermore, with the substantial rise of small business lawsuits (a trend that is only continuing), this becomes even more essential for business owners.

Business Incorporation can be handled as an administrative matter with the state agency that processes formations.  You can handle it yourself but it is critical that you learn all the specific requirements because an improper incorporation can put your liability at risk.  Another option is to hire a lawyer or for a more affordable alternative, you can use a reputable incorporation services provider - just make sure they are experienced.

About the Author:

Click here for more information about business incorporation or to see reviews of the top  incorporation services providers.

Article Source: EzineArticles.com 

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Reasons In Support of Incorporation 

By Ladislav Beganyi

Separate Legal Entity

A company has a separate legal existence. In effect, you and the corporation are different 'persons'. The result of this is that under Canadian Law, it has many of the same rights and obligations as a natural person. A corporation can own land or other assets, it can borrow money, enter into contracts, sue or be sued, and even (in some situations) be found guilty of committing a crime. It also means that the entity is taxed separately from its owners.

Limited Liability

Shareholders of a corporation are not liable for the company's debts. A shareholder will only lose his or her investment if the entity goes bankrupt - except where the shareholder has provided a personal guarantees for the corporation's debts. Generally, shareholders cannot be sued for liabilities incurred by the corporation, even though shareholders are owners of the corporation. In certain circumstances, however, the courts in Canada have "pierced" the corporate veil in order to allow the shareholders of a corporation to be sued. This generally is not a concern as the conduct of the shareholders must generally be quite reprehensible in order for a court to undertake this extreme remedy.

Lower Corporate Tax Rates

A corporation is taxed separately from its owners and generally at a lower tax rate. This is especially true for small businesses as the first $500,000 of income earned by a small business is taxed at a federal rate of only 11%. With proper tax planning, a shareholder can take advantage of this small tax rate to reduce their overall tax burden to them.

Greater Access to Capital

Raising capital is often easier for corporations. For example, corporations are entitled to issue bonds or share certificates to those who invest money in them. Other forms of business must rely solely on their own money and loans for capital.

Often, corporations are able to borrow money at a lower rate than other forms of business. This is because lenders perceive loans to corporations as being less risky investments.

Continuous Existence

Sole proprietorships or partnerships no longer exist if the business owners die. Corporations have perpetual existence, which means that shareholders, officers and directors can come and go without affecting the distinct legal personality of the corporation. Ownership would transfer to the shareholders' heirs, and the legal status of corporation would be unaffected. A corporation allows the business to attract and motivate employees and management by allowing for partial ownership of the corporation. It is possible for a corporation to merge or amalgamate with another corporation.

About the Author:

Ladislav Beganyi

Beganyi Professional Corporation

Article Source: EzineArticles.com

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Advantages of Incorporating a Company

By: Jodi Kukla

Incorporating a company makes sense for most small business owners. Unfortunately, many of them fail to take this important step and then miss out on numerous benefits. In addition to tax savings and limited liability protections it provides for themselves and their assets, many other advantages make incorporating a company an essential step toward small business success.

Limited Liability

Many businesses start out as a sole proprietorship, which means that you, as the owner, are responsible for all of the company's liability. Debtors can seize your personal assets, such as your house and vehicles, to cover the incurred debt. With incorporation protections, you become a shareholder of the corporation, and therefore are not personally liable for the company's debt in the event that it goes bankrupt or is shut down for any other reason. You are only responsible up to the amount of money you have currently invested in the company.

Raising Money

Corporations can grow faster because they have more sources for raising capital. You can "go public."  By incorporating a company, you can issue and sell corporate stock to shareholders to raise equity capital, which typically does not incur interest or have to be repaid. The only disadvantage is that you lose a percentage of ownership when you sell shares.

Unlimited Life

Incorporating a company means you are essentially creating an entity that can live forever. Even if you sell the business, the shareholders die or sell all of their shares, or there is a change in ownership, the corporation continues to operate.

Higher Business Profile

It's easier to attract new investors for a corporation because of the limited liability and other advantages previously discussed. But that's not all. Incorporating a company and putting Inc., Corp. or other legal designation after your name can increase your customer base because people tend to think of corporations as being more established and stable.

Tax Savings

You are required to pay self-employment tax on your profits when you operate as a sole proprietor. Conversely, by incorporating a company, you only have to pay self-employment tax on the salary you pay yourself.

Consider the following example: Say your business has $200,000 of gross income in 2011. Your deductions total $100,000, leaving $100,000 of income that you will receive. How does having a corporation and taking $100,000 partially as salary and partially as dividends save you money?

If you operate as a sole proprietorship you must report the entire $100,000 as earnings from self-employment as income on your 1040 form. You must also pay self-employment tax on these earnings, which will be $12,283. (You are entitled to deduct one-half of this payment from your gross income.)

One the other hand, by incorporating a company, you can elect to receive a $20,000 dividend and $80,000 in salary. The total employment tax liability is $10,640. (Although your corporation receives a deduction for the employment taxes it pays.) Using the dividend/salary strategy would save you over $1,600 in employment tax liability in 2011.

And, if you're incorporating a company as an S corporation, you can avoid "double taxation" and reap even more tax benefits.  There are a multitude of factors to consider when determining if you should incorporate your business, and if so, which type of entity to form.

Are you thinking about starting a new business or want to incorporate your sole proprietorship? If so, incorporating a company is easier and more affordable than you might think. Learn more about the many advantages of incorporation by visiting www.TheDelawareCompany.com or calling 1-888-338-2677.

About the Author:

Jodi Kukla is the Director of Marketing for The Delaware Company, a full-service, online incorporation service provider, offering small-business owners a fast, easy, and economical way to form a corporation, limited liability company (LLC), or other business structure online or by phone. Visit www.TheDelawareCompany.com to incorporate online today. Call The Delaware Company at 1-888.338.2677 or email customerservice@theusacompany.com.

Article Source: ArticlesBase.com

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Do You Need Help To Form An LLC?

by Rudy S. Silva

 What is an LLC and why should you form an LLC?  Which incorporation services company would provide you security and satisfaction?

If you decided to run a business, then it will do you good to look at the advantages that LLC has. LLC or Limited Liability Company is a combination of partnership and corporation. It involves the characteristics, methods and processes found in both of these organizational structures.

As much as it worth it, investing your money in a business would require you exert a massive amount of effort and courage. There are always risks in the commercial world. Aside from the stiff competition, the never ending fluctuations and financial crisis may also increase the risk. Now, where does forming an LLC or incorporation of services enter here?

As mentioned, LLC is also partly a corporation. In that case, it will also be a legal entity that is separate and different from its owner. The limited liability in LLC is a very important reason why you should form your company with it. In the LLC, if it fails your personal assets can not be attached and liquidated. This is because, the persona properties of members do not form part of the organization’s assets.

Like corporations too, it involves other businessmen who are called members rather than stockholders. What’s very interesting about it is the LLC does not have limitation on the number of members. It can accept members as long, as they can comply with the bylaws. Moreover, LLC can offer a more flexible taxation rate.

Incorporating services of your business to an LLC would also require fewer formalities. This is one of the advantages of Limited Liability Company versus partnership and corporation. Nevertheless, the simplicity of its formation doesn’t mean that LLC is less effective than the other two.

Nowadays, more and more businessmen start a LLC. They are found and scattered all over the internet and the world. Organizations such as My New Company, First Capital Advisors and Grays LLC offer incorporation services. They provide incorporation advice to many clients before and after the incorporation. They may also offer them alternatives and choices.

Starting an LLC could either simple or complicated; it actually depends on your understanding of it. However, there are some guidelines that have been posted in the internet. They are purposely disclosed by government agencies to aid anyone who intends to register LLC incorporation. They believe that by letting the people know what to do, what to bring and where to go is more practical for everybody.

There are also forums and other resources that could help in creating an LLC. People love to share experiences, ideas and information on the net. Some of them are helpful, while others are not.

Moreover, you may also hire the services of a registered LLC agent or an incorporation services company. An agent is usually expert and knows everything about his job. Hiring his services, though would cost you money, but his services would surely save you from making filing mistakes

We are ready to file the required paperwork at http://www.mynewcompany.com/ to help you form an LLC. You don’t have to struggle to get this done. We go beyond to help setup your company with the after forms to operate your LLC. We offer many other business and filing services. Go to LLC form  http://www.mynewcompany.com/blog/form-an-llc/ , and you will be surprised at the service we provide.

Article Source: ArticleRich.com

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Get Your Business Started With Your Articles Of Incorporation

by Wade Anderson

 The articles of incorporation sometimes called the certificate of incorporation or company charter is the main set of rules that govern the management of the corporation and is usually filed with the state or other regulatory agency. It usually sets out in detail the following information:

•           Name of the incorporator

•           Names of the initial board of directors

•            Location of the corporation’s registered office

•           Specific purpose of incorporation

•           Number of shares of stock that the corporation is authorized to have

•           Name and address of the incorporator

Articles of incorporation have many variations as they differ from one corporation to another and from one authority to another. The articles of incorporation do not however need to give too many details regarding the operations of the corporation as these are given in the bylaws of the corporation.

The first step needed when filing the articles of incorporation is to check if the name that has been chosen for the corporate entity, is available. This information is readily available from the corporate filing office. It is also necessary to complete, though it does not need to be filed, the bylaws of the corporation.

Filing articles of incorporation bestows certain legal benefits on the corporation. For example, it helps protect personal assets against the claims of creditors as well as in case a lawsuit should be filed against the corporation. This is because, in the case of an incorporated entity, shareholders, directors and officers are usually not liable for their corporate entity’s debts. In addition, transferring ownership is no problem at all. Tax rates of corporate entities are also lower than those of individuals.

Once the articles of incorporation have been duly filed with the secretary of state of the jurisdiction, the corporation comes to life on the date of the filing and can commence business immediately after the filing. Broadly speaking, the name of the entity, its main purpose of existence, its intentions, its length of existence, its registered office address, and the number of directors in the corporation all need to be spelt out in the articles of incorporation. In addition, mention needs to be made of the authorized number and qualification of members and how the property of the corporation is to be handled.

The costs of incorporating are a little more than what is paid for the initial corporation or LLC setup. Besides costs, there are other aspects that need careful study and analysis. What are the various tax advantages available, indemnification and covenant not to sue, federal, state and local requirements, protecting the name of the corporation, the best structure for the entity, keeping complete records, reviewing leases and contracts.

As with most important documents, getting the articles of incorporation vetted by a legal counsel is a must. Once the articles have been filed, the corporation must get its own seals, minute books and stock certificates. The owners of the corporation are solely responsible for any infringements to the name that they have chosen. In case the entity is a professional association, the word “chartered”, or ”professional association” or “P.A.” must be contained in the name.

Wade Anderson is a CPA and operates DigitalWorkTools.com Legal Forms and Business Documents.  Click to view a sample Articles Of Incorporation.

Article Source: ArticleRich.com

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Incorporate to Expand Your Company's Potential

by Chris Robertson

 Starting a new business is often an exciting venture, but also involves many important decisions. One of the crucial decisions you'll make concerning your new business is whether or not to incorporate. Incorporating a small business has its advantages, of course, but you should carefully weigh the requirements of incorporation to make sure it's the right path for you.

If you're not sure about incorporation at the start, you can even start out as a sole proprietorship and incorporate later on as your business grows. Let's explore some advantages of incorporation and how they affect your business.

Limited Liability

Probably the most advantageous feature of incorporation is limited liability for your company. This means that your personal assets such as your home, car, and other valuables cannot be seized if someone sues your corporation. A corporation has individual rights, meaning it can sue or be sued, incur liabilities, own property, etc. As an individual shareholder in your corporation, you personally will only have to assume liability for the amount you have invested in the company.

Easier to Raise Money

When you incorporate, your business has more opportunities to raise the capital needed to grow. It's easier to raise money through shareholders, and incorporating also means the business will be able to borrow and incur debt just like a sole proprietorship. Your corporation can also raise capital using equity.

Note: A drawback to incorporating and allowing shareholders to invest is you will lose a percentage of your ownership in the company.

Tax Benefits

Incorporating your business also may give a potential tax deferral. You'll be able to defer tax payments until a later date, and possibly enjoy a lower tax percentage rate if you happen to be in a lower tax bracket at that time. You can also defer taxes in hopes that the tax rates will fall by a certain time. When incorporating a small business, the business may qualify for a small business tax deduction.

Income Benefits

A corporation offers some income advantages as well. Your income can be dispersed to you at a time determined by you. This allows you to possibly pay less tax (as mentioned above). You can also split income or dividends with other shareholders, even if your own family members are shareholders. This allows you to distribute income to those in your family who are in lower tax brackets from those that are in a higher bracket.

Other Benefits of Incorporation

Corporations can live on even when shareholders die or decide to leave the company. This means a corporation basically has an unlimited life span. Another advantage of being incorporated is this may help you attract more business. Being incorporated may cause potential customers to see your company as more stable than companies that are not incorporated. Some larger companies will only do business with an incorporated company because of liability issues. Incorporating also gives your business name a more professional tone.

If you're not sure about incorporation, another option to consider is LLC formation. When you form an LLC (limited liability company), you will incur some similar benefits of an incorporated business but without so many formalities. There are no ownership restrictions for LLCs, so anyone can own interest in the company. Owners of an LLC are called members instead of shareholders.

Whichever option you choose, consider online incorporation or forming an LLC online. This makes the process quicker and easier as well as more affordable. Online incorporation makes it simple to take your small business to the next level!. 

Chris Robertson is an author of Majon International, one of the worlds MOST popular internet marketing  companies.

For tips/information, click here: incorporate

Visit Majon's Business and Entrepreneurs directory .

Article Source: ArticleRich.com

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How to Incorporate a Business

By Wayne Hemrick

                        The question of why incorporate a business has a simple answer:  a corporation is a legal fiction that is used to protect the business owner's personal assets from being taken should the owner be sued.  If you are a sole proprietor, you might be considering making the switch over to incorporation.  When you are ready to learn how to incorporate, business owners should know that they can use services that allow them to incorporate online. 

How to incorporate depends on what corporate structure you wish to use for your business.  There are four basic types of incorporation, and they include the LLC, an S-corporation, a C-corporation, and a non-profit.  There are several factors that go into the choice of which structure to use.  You will need to decide if your business has a great amount of growth potential, or if what you are selling has the potential of causing injury to people who purchase the product or service and if you could be sued for damages.  You will also have to decide how much paperwork you are prepared to deal with, or if you have the resources to hire a professional accountant.  Another question to consider is if your business will be conducted outside of your home state. 

If you answer in the negative to all of the above questions, then an LLC might cover your business's needs.  If you find yourself answering affirmatively to one or more of the questions, then you will want to seriously consider utilizing the S-Corporation structure.  Some states offer more protections and privacy with less regulation than others, so you will need to think about the scope of your business.

There are many organizations that are ready to help you get started with the process of online incorporation.  When you are considering incorporating, business owners are pleased to discover that filling out the required paperwork does not require a legal professional.  Having said that, business law is very complex, and it is easy to make mistakes that can cost you big bucks, so many business owners like to have a professional handle this aspect for them. 

You may want to consult with your tax adviser or accountant for help with incorporation, or you could hire an attorney.  The last is not the least expensive option, however, and can sometimes be priced out of a small business owner's budget.  A popular way to get help with incorporating is to use an online incorporation service.  These economical services help you with all of the appropriate paperwork you will need in order to get set up as a corporation.  They are also prepared to do so in each state in which you would like to do business.  When you incorporate online, the fees and services offered can vary a great deal, so it pays to comparison shop for these services in order to find the best service at the best price. 

                        Wayne Hemrick offers advice to business owners on incorporating business. He advises owners on using online incorporation services and provides insights on how to incorporate business online.

Article Source: Free-Articles-Zone.com   

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The Entity Choices Available for Incorporation

by Wayne Hemrick

Easy access to the World Wide Web has made almost everything faster and more convenient - including taking care of legal matters when it's time for your small business to incorporate online. Most small businesses will choose to form an LLC, or "limited liability company," but this particular choice may not be right for every business. As you will see, when you decide to incorporate online, there are several different options available.

Why Form A Corporation?

Although it makes things more complicated all around, if you are self-employed and in a line of work in which liability is an issue - particularly landscaping and construction, financial services or consulting - it's a very good idea to form an LLC, or some other kind of business entity.

The reason is protection of your personal assets. Suppose you are a sole proprietor who provides landscaping services, a nursery provided you with shrubs that turned out to be poison, and you client or one of their children or pets became very sick as a result. That client would be within his/her rights to sue for everything you own - you car, personal possessions, and even your home.

However, if you operate your business through an entity such as a Nevada limited liability company, that client could only sue the business - your own personal and real property would be considered separate by the courts and therefore "hands off."

Online incorporation allows you to protect your own property in the event that your company incurs some kind of liability. It also protects your own personal credit should the business run into financial difficulty, as the business itself has its own credit file separate from yours. In addition, there are several tax advantages to online incorporation.

What Choices Are There?

How you decide to incorporate online depends on several factors, such as the size of the company and how much control over its operation you are willing to relinquish. The most common are:

* LLC: You can form an LLC with just one person. It is an "enduring entity," meaning that you can legally transfer it to another party. A Nevada limited liability company has particular advantages.

* C-Corp: This is the most common type of corporate entity. This is also good to consider when incorporating in Nevada, but only if your company is large enough to justify it.

* S-Corp: When you incorporate online and chose this particular form, you are basically choosing to operate like a C-Corp, but electing to be taxed differently. This may be appropriate for many smaller companies that are nonetheless too large for one person to run efficiently.

Incorporating in Nevada

Nevada is one of those states that are known as "corporate havens," and with good reason. Primarily, when you incorporate online and choose Nevada as the state of registration, you'll pay less in fees and enjoy greater protection; in addition, a Nevada Limited Liability Corporation can be considered sufficiently capitalized at levels as low as $200.

Consider Online Incorporation Today

It is relatively easy and inexpensive to incorporate online; often, you can do it yourself. If you prefer, there are also many companies online that can assist you with the process of incorporating in Nevada.

Wayne Hemrick provides businesses with advice on how to form an LLC in Nevada. An LLC in Nevada offers many benefits, and Wayne explains the options available when considering incorporating in Nevada.

Article Source: Amazines.com

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