Should I Incorporate? - A Guide to Starting a Business

2007-03-08 10:33:40

( Business )



Should I incorporate?

A common question, isn't it? But what good does incorporating your business really make? Ease and comfort.

In sole proprietorship, you may have the right to enjoy all the profits of your business, but there's a risk of having a hard time managing your business since you would be the only one who would care about it. While if you incorporate your business, there are others who would be willing to give their best to the company.

In a partnership, a certain trust factor may exist among partners, but such principle is one of the greatest hindrance in managing the business efficiently. While if you incorporate your business, deadlocks are easy to resolve.

Incorporating your businesses has a lot of advantages. The common things are the exemption from state personal income tax and franchise tax on capital stock, creating a legal entity separate and distinct from that of the owners, building a corporate credit, the ease of raising capital, etc.

You may now be asking how to incorporate yourself. There are companies who specialize in helping people incorporate their businesses. They will deal with the government, but for them to do that, you have to cooperate by giving them ideas about you and your business. But it's fine for you and your company to go to the appropriate agency.

Be reminded that each state has its own law regarding incorporation. Well, then you should ask: “Where should I incorporate my business?” There's no problem if you want to incorporate your business in your state, just be sure to know all your rights and everything that you would need to protect yourself and your business.

Incorporating in Florida is good where a corporation lives in perpetual duration and the stockholders enjoy anonymity from the personality of the corporation itself. On the other hand, if you wish to incorporate in Nevada, it requires only a minimal reporting and disclosure requirements so that a person wishing to incorporate his business would not have a hard time doing so and stockholders also enjoy anonymous and private personalities. And probably the best thing in Nevada is that it allows businesses to elect a Nominee Director who serves as the corporate director for public records services.

If you incorporate in Delaware, then it's a good choice. It has a court, the Court of Chancery, which oversees matters involving the General Incorporation Law of the state and whose decisions are issued as written opinions. Therefore, Delaware has a large body of written legal precedent to rely upon. Because of that, companies can be confident in dealing with others since they would not be ignorant of the interpretations of the law.

Should I incorporate? That's probably one of the most common dilemma that every person who wish to establish a new business, and even those who are expecting a growth in their businesses, faces. Well, then, face it.

Should I incorporate? The decision lies upon you.


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