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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Tuesday, March 23, 2010
The Advantages of Incorporating Your Small Business
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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
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
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