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The Advantages of Incorporating

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The Advantages of Incorporating Powered By Docstoc
					The ability to make the right decision at the right time is the most desired quality in
any business entrepreneur. And there are certain business decisions that can take your
entrepreneurial ambitions further ahead than others. The decision to incorporate your
business is one such decision that can affect the future of your business in a positive
direction.
  Before explaining several benefits of incorporation, let us give you the definition of
corporation from a legal point of view. A corporation is regarded as a separate legal
entity, whose existence is independent of that of its owners. The process of
incorporation is guided by the charter or certificate of incorporation of the respective
states. To incorporate a business, you have to fill out the forms for this Charter and
file all the papers along with the requisite fees to the proper state authority.
  If you are planning to incorporate, you are moving towards the right direction,
because the process of incorporation comes with the following benefits:
  Incorporation protects you from the disadvantages of sole proprietorship. As such
you no longer remain personally liable with regards to business debts. In case of a
sole proprietorship or partnership, your personal properties can be seized by the
creditors in case you default on the payment of your business debts. These personal
properties include your home, savings and other assets. But incorporation of your
business makes you one of the shareholders in your company and as such, if your
business is down, as a shareholder you have nothing to lose other than the money you
have invested in your company. Your other properties are safe from liability.
  As a corporation your company gains a much longer life span. In case of sole
proprietorship or in the partnership business, the business virtually comes to an end in
the event of the death of the proprietor or one of the partners. But a corporation is
provided with a legal business structure. No matter what happens to any of its
shareholder or executives, a corporation continues to exist, as it has a separate legal
entity of its own. The ownership can also be transferred without affecting any
business functions just by selling the stocks.
  When you are planning to pump in more capital into your business, a corporation
business structure comes into great help. When you need some more capital
investment, you can sell stocks or other equity interests in the market. If you are a sole
proprietor or running a partnership business, it is much more difficult to attract the
financiers due to the liability issues.
  If you incorporate your business, you can offer many tax-deductible benefits to your
employees including health and life insurance, travel and entertainment expense
account, and retirement plans. This will help you to attract the best managers in the
industry to run your business more profitably.
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