Incorporating a Small Business

If you own a small business and you wish to protect your assets, and stretch your tax dollar to the fullest then you might wish to consider incorporating your business. Maybe you don't know a lot about how to incorporate your business, or why you should. Perhaps, you'd like to know the history behind the reasons people have incorporated their businesses in the past, or how that relates to the same needs, challenges, and issues of our present time and your particular business.

If so, there is a book that I would highly recommend, and one that I have in my own personal library. Interestingly enough, this book has been on my library shelf for 30-years. And when I was clearing out all the old books, donating some and giving others away, I decided to keep it. Not because I could use this same book today to incorporate a business, I can hire a lawyer to do that.

Rather, because I think the history, and arguments for and against incorporating a small business are discussed at length, and they still play today. The name of the book is;

"How to Incorporate; A Handbook for Entrepreneur and Professionals," by Michael diamond and JL Williams, 1987.

Boy, have things changed since 1987, still much of the philosophy and definitions of course and all the history is the same, but the forms are much different and now there are LLCs which they didn't have at all back then. This book is extremely interesting because it helps us understand the evolution of corporations in America both large and small. The flow of business law is quite interesting in that regard. Indeed, I hope you will please consider this.

Article Source: Lance Winslow

Labels: book review, incorporating your small business, legal book review, your small business

If you've been considering incorporating your small business, you've probably been confused about the difference between S and C corporations.

The similarities between S and C corporations are as follows:

1. Both S and C corporations are both separate legal entities that offer limited liability protection. If, for example, the corporation is sued only the corporation's assets are at risk. The assets of the board members or CEO are usually safe.
2. An S Corporation is essentially a C Corporation that has a special tax status with the IRS, created by filing form 2553. The articles of incorporation that are filed with the state are same.
3. Both entities must hold annual shareholder's meetings. Meeting minutes must be kept with the corporate records. Failure to follow this procedure can result in a judge's decision to 'pierce the corporate veil' and hold the corporation's owners personally liable for any penalties or debts.

So what are the differences?

1. S and C Corporations differ greatly with regards to taxation. With S corporations any income or loss generated by the business appears on the personal tax return of the owners. This is often referred to as a "pass-through" tax entity.
2. C corporations are often referred to as separately taxable entities. As you've probably already guessed, any gains or losses do not appear on the owner's personal tax records.

Labels: C corporations, incorporating, incorporating a small business, S corporations, S corporations versus C corporations

Are you a sole trader wondering whether or not you should incorporate your small business? Hopefully this article will spell out some of the key benefits that you could expect to see from small business incorporation.

Incorporation could be the right step for you if you're planning to grow your business going forward. Incorporation will make it easier for you to attract additional funding, either in the form of capital investment or loan finance. Also, should your business hit financial difficulties in the future, incorporation will give you limited liability protection from the company's debts and liabilities. We'll discuss these benefits more fully below.

Firstly, let's discuss why incorporating your small business makes it easier to raise additional funding for the growth of your company.Incorporation provides your business with a formal share structure, and so the issuing and valuation of shares becomes significantly more straightforward, making it easier to raise funds via additional capital investment.

Incorporation also gives your company increased credibility with the financial institutions and therefore makes it easier to attain additional finance.

Next let's look at the subject of personal liability protection.

When you incorporate your small business, it's status changes to become a totally independent legal entity. As a result, you get personal liability protection from any debts incurred by the business. Once incorporated, as a shareholder you will only be personally liable for the debts of the company up to the amount of equity you invested in the newly formed company.

In other words, the business's creditors will only be eligible to payment of amounts owed from the assets of the incorporated company and not from the personal assets of the shareholders and directors.

Personal liability protection is obviously one of the most attractive benefits of small business incorporation. It effectively removes the risk to your personal assets that comes with being the owner of a small business.

As well as the benefits already mentioned, there may also be tax advantages to incorporating your small business.

Before you decide for sure to start the small business incorporation process, you should always seek professional advice from a qualified financial expert, as individual circumstances are different.

Article Source: Richard Taylor

Labels: advantages of incorporating, advantages of incorporating your small business, incorporating your small business, small business

Labels: business, incorporating a small business, what to consider when incorporating a small business