Incorporating a company is a way to establish a separate legal entity for all purposes, meaning it is separate and distinct from its shareholders.
WHY SHOULD I INCORPORATE?
- Tax Savings: This is one of the greatest benefits but must be discussed with your accountant.
- Privacy: The law treats a corporation as a legal “person” that has standing to sue and be sued, distinct from its stockholders. This protects your personal name from the public thereby providing you with privacy.
- Asset Protection: The legal independence of a corporation prevents shareholders from being personally liable for corporate debts. This means that the corporation itself is liable, not the shareholders. Therefore, your assets will be protected including current assets and those you will acquire in the future such as a home.
- Financial Flexibility: The legal “person” status of corporations gives the business perpetual life; deaths of officials or stockholders do not alter the corporation’s structure. The business continues so you can always transfer and sell stock as the business grows. A business that is established will generate wealth and prosperity. In close corporations, many generations will prosper as the business can continue in perpetuity.
WHAT TYPE OF CORPORATE FORMATION SHOULD I CHOOSE?
This is a very important decision and one that will be discussed in detail with your attorney and accountant so that you will meet your stated objectives as outlined above. The following is a brief overview of the different types of corporate formation, including a C corporation, S corporation and a LLC.
CORPORATIONS
S-CORPORATION
LIMITED LIABILITY COMPANY
WHAT YOU NEED TO INCORPORATE YOUR COMPANY
- Names of Officers and Directors.
- Amount of capital to contribute.
- Company Name (This is different from a trademark.)
- Name and Address of Registered Agent to receive service of process.
- Social Security Number of an Officer of the Company.