Frequently Asked Questions About Incorporating
Aspiring entrepreneurs often have numerous questions about the effects and wisdom of incorporating their business. These questions usually revolve around costs, tax consequences, personal liability, legal ramifications, stock issuance, incorporation procedures and requirements for starting a corporation.
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What Incorporation Options Exist For an Entity?
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Starting a corporation is one of several options available to new and existing business owners. Each option has advantages and disadvantages. Entity options include corporations--including limited liability corporations (LLCs)--professional corporations, Subchapter S corporations, general partnerships, limited partnerships and sole proprietorships.
What Does Incorporation Cost?
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Corporation costs can include costs of filing and publishing articles of incorporation, legal fees, printing costs for stock certificates and the usual costs required to start any type of business. If stock will be offered to other investors, additional fees are usually required.
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What Are the Procedures for Incorporation?
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Generally, you do not need a lawyer to incorporate a business. Most states provide samples of articles of incorporation that can be used to incorporate. However, lawyers can assist business owners to comply with potentially complex tax and corporate formality requirements.
What Are the Major Advantages of Incorporation?
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The first big advantage of incorporating is the limitation of personal liability for business debts. The second major advantage is that corporations are more attractive to potential investors due to the limitation of their liability for debts of a business.
What Are the Major Disadvantages of Incorporation?
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The first major disadvantage of incorporating is the potential for double-taxation of income. The second major disadvantage is the additional time and effort required by incorporating.
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