Author Box
Articles Categories
All Categories
Articles Resources

Why You Need to Incorporate

March 28, 2012 | Comments: 0 | Views: 147

Having a company means making important decisions for its growth. If you run a company and you are now faced with a decision whether to choose forming an LLC or to incorporate, now is the best time to know more about these business setups.

What is incorporation?

Incorporation is the act of establishing a business identity. When you and your investors go for incorporation, your company can get tax benefits and reduced liability towards debts accrued in business deals. This step can also help you appropriate your firm's value in case you plan to sell it in the future. You also have more choices when it comes to raising more funds, as you can sell shares to the public.

What are the most important aspects?

Limiting personal liability is the most important feature of incorporating a business. You will not be personally liable for any potential debts and obligations incurred by the company. Of course, this does not mean you easily get off the hook if you happen to commit illegal or negligent acts. Overall, however, you get personal property protection, as possible creditors cannot go after your personal assets. Incorporation, in most cases, amounts to securing your future as an individual while engaging in business practices.

What is an LLC?

A limited liability company (LLC) is similar to a corporation in terms of various benefits for taxes. An LLC also protects the shareholders from liabilities incurred under the company's name. One important feature of an LLC is management flexibility. This business setup quickly gained popularity over the years. Today, small-scale businesses often end up forming an LLC to reap its advantages.

How will companies benefit from forming an LLC?

Forming an LLC is also about drawing clear lines between business and personal property. It means creditors can't go after personal properties of members within the LLC setup. There are certain differences. For instance, LLC shareholders are "members". As a member of an LLC, you cannot sell your membership to others unless all members have agreed to this provision before you formed the business. If a member dies or suddenly leaves, all members have the prerogative to dissolve the company.

One benefit of being an LLC member is never having to deal with mandated meetings. Corporations traded publicly may have this requirement, but LLCs do not. This means members within the LLC can hold as much or as little meetings as they wish. There might also be less pressure as government bodies will not be watching what LLCs do all the time. Authorities like the Securities and Exchange Commission (SEC) will not be inspecting finances closely. Auditing is also less tricky for LLCs as this setup does not require annual audits.

So which one is better?

It depends on how you want to look at a long-term business setup. For example, duration and public share offerings are two drawbacks for LLC. This arrangement cannot last forever if members die or leaves. Transferring a member's share might only happen if all members agreed to this beforehand. You also need to realize that incorporation has its limits. While it can last indefinitely, shareholders need to prepare for annual audits and scrutiny from the SEC.

Christopher Kinnard is a business consultant with experience in incorporation and forming an LLC.

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:



Forming An Llc

Thus, you can apply for the negligence compensation under such circumstances in order to recover your loss, Negligence Claims, Negligence compensation Involvedness of Negligence Claims. The court

By: Simon Liva l Legal > Personal Injury l December 13, 2012 lViews: 292

If a lawyer is not able to devote enough time to your case then your defense is likely to suffer. Moreover specialization in one stream or other of defense is important so that the attorney can

By: Simon Liva l Legal > Criminal Law l December 12, 2012 lViews: 429

Filing a business bankruptcy can be a complex and critical task, but you have several options. You can consult your bankruptcy attorney to know which among those options is right for you.This is a

By: Harvard McIntosh l Legal > Corporations LLC l December 11, 2012 lViews: 235

You can always check for the treatments that are covered. This is because there are some policies which do not give you claims if you meet any kind of head injury.You can always check for the

By: Simon Liva l Legal > Personal Injury l November 05, 2012 lViews: 241

In Colorado, you have many Personal Injury Lawyers to choose from. When you choose the Law Offices of Andrew C. Bubb you instantly put years of experience and legal know how in your corner. Attorney

By: Dilshad l Legal > Personal Injury l October 25, 2012 lViews: 389

If you have been charged with a crime, speak with Boulder criminal defense attorney Steven Louth immediately to protect your rights. Steven Louth is a criminal defense attorney and criminal trial

By: Dilshad l Legal > Personal Injury l October 18, 2012 lViews: 244

Filing a business bankruptcy can be a complex and critical task, but you have several options. You can consult your bankruptcy attorney to know which among those options is right for you.This is a

By: Harvard McIntoshl Legal > Corporations LLCl December 11, 2012 lViews: 235

Limited Liability Companies are great options for small groups of people who desire to start a company. Learn the basics about LLCs before meeting with your local business attorney.

By: Aloysius Aucoinl Legal > Corporations LLCl April 25, 2012 lViews: 168

Setting up your own corporation in the state of California is not easy. There are steps to follow when you want to incorporate in California. This article will give you an overview on the things you

By: Julius Zadamczykl Legal > Corporations LLCl April 16, 2012 lViews: 179

Premium attorneys are charging over $1,000 an hour. Now is a good time to consider outsourcing your electronic discovery and document review work.

By: Jonathan Eastonl Legal > Corporations LLCl April 16, 2012 lViews: 169

When you start a new business it is a dream come true. Your dream can become a nightmare if you do not follow the small business laws precisely to the letter. The only way for you to be sure that you

By: Kenneth Braxtonl Legal > Corporations LLCl April 11, 2012 lViews: 168

Starting and running a small business not only takes business savvy, but also some legal knowledge. There are classes available that can teach you about possible legal issues, but even those can't

By: William Perry Fisher IIl Legal > Corporations LLCl April 10, 2012 lViews: 163

Many business owners choose to form a limited liability company because it comes with many benefits. Learn the perks of choosing a LLC structure and how you can register your industry as a limited

By: Christopher Kinnardl Legal > Corporations LLCl March 18, 2012 lViews: 137

Are you planning to start a new business this year? It is better to know what direction your business is going beforehand. Learn the benefits if you choose to form an LLC.

By: Christopher Kinnardl Legal > Corporations LLCl March 16, 2012 lViews: 133

Many people are not familiar with the concept of a Limited Liability Company (LLC). If you want to know more about it and how to form an LLC, this article can help you out.

By: Christopher Kinnardl Legal > Corporations LLCl March 13, 2012 lViews: 143

Are you planning to start a new business? You have to do a lot of paperwork first. Get the right company that will provide you quality document filing services for online incorporation.

By: Christopher Kinnardl Business > Entrepreneurialisml February 25, 2012 lViews: 160

Discuss this Article

comments powered by Disqus