Small Business Incorporation Lawyers
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What is incorporation?
- Business (for-profit) corporation
- Non-profit corporation
- Private corporations
- Professional corporations
What steps are required to incorporate a small business?
- Articles of Incorporation: These are filed with the relevant state office and are also known as a “Charter”, “Certificate of Incorporation”, or “Letters Patent”, and must clearly state:
- The purpose of the business
- The principal place of business
- The business’ registered agent who will act as a contact person
- The types and number of shares of stock
- Corporate Name: All corporations must have a name that describes their business and includes a legal ending such as “Inc., Corp., or Ltd.” depending on the type of corporation
- Corporate Bylaws: The company must also file these documents with the state. These are written with the purpose of outlining important administrative details, such as:
- Date for annual shareholder meetings
- Voting guidelines
- Process for notifying shareholders of “special” meetings
What are the benefits of incorporating a small business?
- Limitations on personal liability: Shareholders in any corporation are usually shielded from being personally liable on the obligations and debts of the company.
- Protection of personal assets: If the corporation gets sued, the individual shareholders they will absorb the liability (for example, the shareholder’s home cannot be repossessed to pay corporate debt)
- Transfer of ownership: Ownership rights in a corporation are easily transferable, whether in whole or in part. Many state laws are tailored specifically to make transfer of ownership easier
- Tax benefits: Corporations are generally taxed at a lower rate than are individuals. They may also own shares in other existing corporations and receive tax-free dividends.
- Continuity/durability of existence: Corporations do not end with the death or incapacity of a shareholder. They may also have more resources available for generating profits that may be reabsorbed into the business over time
- Credit scores: Corporations build their own credit rating and amass their own credit scores using corporation credit. Thus, individual shareholder’s credit ratings generally do not affect the business’ credit score
- Centralized management: In corporations, management responsibilities are delegated to specific actors.
Do I need a lawyer for incorporating a small business?
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Last Modified: 06-02-2014 03:23 PM PDT
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