eHow launches Android app: Get the best of eHow on the go.

How To

How to Determine if You Need to Incorporate

Contributor
By eHow Contributing Writer
(1 Ratings)

Decide whether it is time for you to incorporate.

Difficulty: Easy
Instructions
  1. Step 1

    Consider the advantages that incorporating will offer you and other owners of the company.

  2. Step 2

    Know that corporations are legally separate from their owners. The shareholders in a corporation stand to lose their initial investment and no more. Owners of other types of companies can be held peronally liable.

  3. Step 3

    Consider another advantage of corporations: Creditors generally can't hold the owners personally liable for corporate debts.

  4. Step 4

    Decide whether it is crucial that the company live on after the owners die or retire. A corporation's ownership can be transferred. Many other types of businesses dissolve when owners leave.

  5. Step 5

    Know that the shareholders of a corporation don't bind the firm by their individual acts.

  6. Step 6

    Consider the importance of attracting capital. Corporations can more readily win investors than can other types of companies. Corporations can sell bonds and stock. They also can retain earnings of $100,000 to $250,000 and avoid paying taxes on that money.

  7. Step 7

    Weigh the merits of setting up medical-benefits programs for employees. Corporations can deduct health-related expenses without having to report those amounts as income.

  8. Step 8

    Keep in mind that corporations generally do more paperwork and pay more kinds of taxes than do other types of organizations.

Tips & Warnings
  • Ask friends who have incorporated how they did it and whether it was worth the hassles and costs.

Post a Comment

Post a Comment
  • Have you done this? Click here to let us know.
I Did This

Related Ads

Get Free Business Newsletters

Copyright © 1999-2009 eHow, Inc. Use of this web site constitutes acceptance of the eHow Terms of Use and Privacy Policy.   en-US Portions of this page are modifications based on work created and shared by Google and used according to terms described in the Creative Commons 3.0 Attribution License.

eHow Business
eHow_eHow Business and Finance