Sunday, April 4, 2010
Incorporating Your Small Business
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Having a self-sufficient business is probably one of the most common of dreams. Even more so incorporating small businesses into big businesses with larger perspectives and larger visions.
If you have a small business there comes a point in time when you will need to make a decision on whether or not you need to incorporate.
Almost every small business starts as a proprietorship or a partnership and as they grow they ponder over the idea of incorporating.
One of the primary advantages of incorporating your business is that it offers limited liability. If a business is under a sole proprietorship the liability of the business is the responsibility of the proprietor. When the same business is incorporated, the responsibility will depend on the amount of stake or share in the company.
Another salient feature of incorporation is that if you have a debt under the name of the corporation you as an individual will not be held responsible for it. With a proprietorship or partnership, a similar debt would have resulted in the seizing of your assets.
The second most important advantage of incorporating your small business is continuance. In comparison to a sole proprietorship a corporation has a larger life span. In fact legally it has an infinite life span.
If the company shareholders leave the company, die or if the ownership changes. A corporation will always exist.
Business is driven by capital and as a corporation it is easier to raise capital. Influx of capital or funds will help the business to develop, grow and bring in more funds. When you incorporate your small business, you are not only able to borrow as a corporation, but you can also sell shares and raise equity capital.
If the key benefits of incorporating are in line with your companies goals you can begin the process of incorporation.
If you have a small business there comes a point in time when you will need to make a decision on whether or not you need to incorporate.
Almost every small business starts as a proprietorship or a partnership and as they grow they ponder over the idea of incorporating.
One of the primary advantages of incorporating your business is that it offers limited liability. If a business is under a sole proprietorship the liability of the business is the responsibility of the proprietor. When the same business is incorporated, the responsibility will depend on the amount of stake or share in the company.
Another salient feature of incorporation is that if you have a debt under the name of the corporation you as an individual will not be held responsible for it. With a proprietorship or partnership, a similar debt would have resulted in the seizing of your assets.
The second most important advantage of incorporating your small business is continuance. In comparison to a sole proprietorship a corporation has a larger life span. In fact legally it has an infinite life span.
If the company shareholders leave the company, die or if the ownership changes. A corporation will always exist.
Business is driven by capital and as a corporation it is easier to raise capital. Influx of capital or funds will help the business to develop, grow and bring in more funds. When you incorporate your small business, you are not only able to borrow as a corporation, but you can also sell shares and raise equity capital.
If the key benefits of incorporating are in line with your companies goals you can begin the process of incorporation.
- The first step to incorporation is to choose a corporate name and have a proper business address. You can not run corporation out of home unlike with a sole proprietorship.
- Secondly, you need to select the state in which you will be incorporating. Your home state may not be the best state for incorporation. You should Chose the state that will derive maximum benefit.
- Thirdly, you need to select the type of corporation that will most benefit your company. Speak with your accountant, business consultant and/or legal consultant to determine what type of entity will be the best for your business. It may be a LLC, an S corporation or maybe a C corporation.
- The next process is to choose the type of share. As a corporation, you can issue common stock as well as preferred stock.
- Next, you will need to obtain a Certificate of Incorporation, which is normally available with the Secretary of State's office.
- Lastly, you need to process and file your incorporation documents. This process can be taken care of by a registered agent or an attorney.
Once you are incorporated make periodic appointments with your resident agent to ensure your corporation is in compliance with the secretary of state.
Article Source: Chris Howard
Article Source: Chris Howard
Labels: incorporating, incorporating your small business, small business, your small business
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