Incorporating your business can have many advantages. Adding 'Inc.' to your company name can lend a great deal of credibility and help your business establish a professional image. Because corporations involve more complex legalities than unincorporated businesses, it is generally advisable to seek the advice of an attorney who specializes in corporate law and will work to protect the rights of your corporation. This guide is designed to help you make an informed decision when it comes to incorporating your business and to choose the right corporate law service provider for your business.

Should You Incorporate Your Business?

There are several factors to consider when making this decision, so it's wise to conduct thorough research to be sure you are making the best choice for your company. A main factor that distinguishes a corporation is that it legally exists separately from its owner or owners. A corporation's owners are its shareholders, whose percentage of ownership in the business is represented by corporate shares or stocks. Shareholders can choose a board of directors to manage business operations, or they can create a shareholders' agreement, which will allow them to manage the business directly. This brings several advantages and also some disadvantages to think about when making your decision.

Advantages of Incorporation

1. Since the corporation is a separate entity, its owners and directors are protected from liability in the event of a lawsuit. Shareholders cannot be held personally liable for corporate debt.

2. Corporations have a distinct advantage in the ability to raise capital through the sale of company stock.

3. Certain tax advantages are inherent in owning a corporation; as the owner, your profit from the corporation will be paid to you in the form of a salary, plus any dividends and bonuses. Any additional profits from the business will be taxed at a lower, corporate rate.

4. Many corporations prefer to do business with other corporations. This can be a definite advantage if your company provides business to business services.

5. A corporation is a more permanent type of organization, because it does not end with the death of its founders.

6. Investors tend to have more confidence in businesses that are incorporated, which can make it easier for corporations to raise investment capital.

7. Corporations can provide benefits such as health insurance to members and employees. The corporation can then deduct a portion of the cost of these benefits at tax time.

8. As a corporation, your business can offer advantages such as stock options, making employment with your company appealing to highly qualified talent.