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Benefits of Forming a Corporation

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business as a sole proprietorship or general partnership, you may be wondering about

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the benets of forming your business as a corporation. Often business owners think that
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incorporation is too costly or too time-consuming, and neither is the case.

The benets the owners gain by forming their business as a corporation typically

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outweigh any perceived disadvantages. These benets are, in many cases, unavailable to
sole proprietorships and general partnerships.

Incorporation benefits include:

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Limited Liability Corporations provide limited liability protection to their owners

(who are called shareholders). Typically, the owners are not personally responsible
for the debts and liabilities of the business; thus, creditors cannot pursue owners
personal assets, such as a house or car, to pay business debts. Conversely, in a sole
proprietorship or general partnership, owners and the business are legally
considered the same and personal assets can be used to pay business debts.
Tax Advantages Corporations often gain tax advantages, such as the deductibility
of health insurance premiums paid on behalf of an owner-employee; savings on
self-employment taxes, as corporate income is not subject to Social Security,
Workers Compensation and Medicare taxes; and the deductibility of other expenses
such as life insurance. For information on the types of tax advantages your business

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may gain by forming as a corporation, please speak with an accountant or tax

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Establishing Credibility Incorporating may help a new business establish

credibility with potential customers, employees, vendors and partners.
Unlimited Life A corporations life is not dependent upon its owners. A

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corporation possesses the feature of unlimited life, meaning if an owner dies or

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wishes to sell his or her interest, the corporation will continue to exist and do

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business.
Transferability of Ownership Ownership in a corporation is typically easily
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transferable. (However, there are restrictions on S corporation ownership.)

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Raising Capital Capital can be raised more easily through the sale of stock.

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Additionally, many banks, when providing a small business loan, want the borrower

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to be an incorporated business.
Retirement plans Retirement funds and qualied retirements plans, such as a
401(k), may be established more easily.

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Corporations do not come without perceived potential disadvantages.

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Potential disadvantages of a corporation

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Double Taxation C corporations are subject to double taxation of corporate

prots when corporate income is distributed to the owners in the form of dividends.
The double tax is created when tax is rst paid at the corporate level. If corporate

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prot is then distributed to owners as dividends, the owners pay tax at the
individual level on that income. The double tax can be avoided by electing S
corporation tax status with the Internal Revenue Service.

Thanks for sharing,

@Yeager_Harrison! 5 hours ago

Formation and Ongoing Expenses To form a corporation, articles of

incorporation must be led with the state and the applicable state ling fees paid.
Many states impose ongoing fees on corporations, such as annual report and/or

Thank you for sharing,

@goatmilkjim! 5 hours ago

franchise tax fees. While these fees often are not very expensive for small
businesses, formation of a corporation is more expensive than for a sole
proprietorship or general partnership, both of which are not required to le
formation documents with the state.
Corporate formalities Corporations are required to follow both initial and annual
record-keeping tasks, such as holding and properly documenting initial and annual
meetings of directors and shareholders, adopting and maintaining bylaws and
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Learn how you can boost your

#startup or small #business using
color via this #infographic
https://t.co/GgALvmUL0O
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issuing shares of stock to the owners. Sole proprietorships, general partnerships

#branding #design 5 hours ago

and even LLCs do not incur the formalities imposed on corporations.

For specic questions on whether the corporation is the best structure for your business,

RT @wantify: Day 2 in the books

@MainStreetsConf- Met some

it is best to seek the advice of an attorney or accountant. .

friends

Learned some things

Had a great time

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