10 Things to Know About Incorporating a Business
What You Need to Know to Incorporate Your Business
Before you file articles of incorporation, here are some facts every business owner should know about this important, sometimes confusing, procedure.
1. Becoming a corporation is not that expensive
Working with a professional, you shouldn't have to pay more than $2,000 for articles of incorporation (and will often pay less than that). Situations vary, but many people are surprised at the relatively low cost of the procedure.
2. Incorporation helps protect your personal assets
Because you are personally separate from the corporation, your assets can not be seized if your company is forced into bankruptcy or is held liable in a lawsuit.
3. You need to incorporate if you want to offer shares in your business
After filing articles of incorporation you can take on official investors in your business and offer stocks and bonds to help finance your business and grow financially.
4. You are going to pay less in taxes if you incorporate
There are a multitude of tax savings for incorporated businesses. Becoming a corporation can potentially save you thousands of dollars in taxes on a variety of items (insurance, entertainment, travel, etc.)
5. A corporation is not affected by the death or bankruptcy of its shareholders
As long as all the proper paperwork continues to be filed, a corporation will continue to exist after its founders have departed.
6. You don't have to hold a lot of meetings if you own a corporation
An /"S/" corporation is a closed company that allows you to perform all the functions of an incorporated business without a lot of the meetings and required filings.
7. Corporations can change hands without interruption to the business
A corporation can be sold or change hands, provided that all the paperwork is filed to change the names of the parties involved (officers, etc.) and a new TAX ID number is requested.
8. You can take money out the corporation whenever you need it
You are NOT limited to payroll when you need to take money out of your business. You can simply perform a draw or owner distribution when you need funds.
9. An attorney can help you stay compliant
A good lawyer will help make sure all your filings are properly executed each year, and everything is kept nice and legal within the walls of your corporation.
10. Consult with a professional
Attorneys or accounting companies can help you make the right decisions surrounding incorporation. Incorporation is a complex procedure, and the assistance of a professional is highly recommended.