Advantages of Incorporating

Why Businesses Choose to Incorporate

Typically, the reason most people form a legal business entity is to safeguard their personal assets (bank accounts, investments, real estate, etc.). Incorporating or forming a Limited Liability Company (LLC), and complying with the legal requirements for the business structure you select, helps you conduct your business free from worry.  Don't lose personal savings or possessions because of a business liability. 

Corporations and LLCs are separate legal business entities that enjoy certain protections under the law and provide business owners with other benefits, too.

Advantages of Incorporating or Forming an LLC

  • Reduce your personal liability. If you operate as a sole proprietorship or general partnership, you're personally responsible for any business debts or lawsuits against your business. Essentially, almost anything you own can be at risk. Owners of corporations and LLCs maintain separate business and personal identities; therefore, once you¿ve incorporated or formed an LLC, and complied with the legal requirements for the type of entity you selected, your personal assets should be protected from any liability incurred by your business. 
  • Save on taxes. Corporations are taxed at a lower rate than individuals. As an owner of a corporation or an LLC, the cost of insurance or business travel and entertainment, for both you and your employees may be tax deductible as business expenses.
  • Improve your credibility. Simply put, an "Inc." or "LLC" after your company name conveys a real authenticity to your business that will impress potential customers, vendors and lenders. It essentially says you are genuine, committed to excellence, and you're a credible businessperson.
  • Attract investors. Corporations attract investors through the sale of stock. Investors will be drawn to your business and feel more comfortable when they're protected from any liability by virtue of your incorporation status.
  • Ensure continuity. Corporations are enduring business entities. They have a business life that extends beyond an owner, principal or partner. Incorporating avoids any legal consequence or even dissolution of the business in the event of long-term disability or death.
  • Transfer ownership easily. Incorporation allows you to transfer ownership through the simple sale of stock.
  • Share responsibility. While you or a partner may be the day-to-day decision makers, your board of directors will review the business periodically and help make final determinations. This assists in preventing individual judgments that could result in harm to the business.

Frequently Asked Questions

1.  What are the costs to form a Corporation or LLC?

CorpAmerica offers Delaware and Nevada formation packages for only $49, plus applicable state fees.  Other states are just $89, plus required state formation fees.

2.  How is the formation of a Corporation different from a Limited Liability Company?

Corporations file Articles of Incorporation with the state and use Bylaws to set forth the management rules with their shareholders, directors and officers. LLCs file a Certificate of Formation (sometimes referred to as Articles of Organization) with the state and draft an internal Operating Agreement to govern their membership. Corporations offer shares of stock and LLCs offer membership interests.

3.  In which state should I incorporate or form an LLC?

Most businesses incorporate or form an LLC in the state in which they conduct business. It is typically more economical to incorporate locally, and you will avoid paying franchise taxes and filing annual reports in more than one state.

However; a business entity may choose to incorporate in any of the 50 states or the District of Columbia. Due to their unique incorporation laws and favorable tax policies, Delaware and Nevada are known as business-friendly states for LLCs and Corporations. Other popular states include California, Florida, and New York.

Did you know?

Statistics tell us that an estimated 50,000 lawsuits are filed every day in the United States. Forming a Corporation or LLC will limit your liability and help protect your personal assets.