Becoming A Corporation

żby: Soeta Azieda

From a caterpillar to a butterfly

The firm who has its articles of incorporation approved in a state is called a corporation. An immensely important decision in the life of a project is to build a corporation, which means to form a society. It involves evolution, it implies assumption of responsibilities and it provides independence to your firm in relation with its founders. It also means transcendence.

Transforming your business establishment into a corporation will open a world of opportunities. If you set up a corporation in USA, a country that has made entrepreneurship a lifestyle, the profit options are endless. This is evident in the number of profitable and top companies in the world. Before setting up a corporation, it is wise to consider the advantages and disadvantages of a corporation. Seek advice from professionals. It will save you money, time and energy.

The primary advantages of a corporation are the protection of assets and tax benefits. Protection of assets is the main motive behind turning business enterprises into corporations.

The main reason why business people decide to become a corporation is for the protection of their personal assets. This gives them a total protection over their belongings, such as their house, family savings and other goods. In other words, if a time comes when the business doesn't work well, these personal assets cannot be touched. This is a protection against the creditors who won't be able to knock on the stockholders' door. This limited responsibility is an advantage of corporations only. The owners of 'Sole Proprietorship' or 'Partnership' will have to pay with their own properties in case of business debts.

As we said before, being a corporation will also bring you tax benefits. While corporations are able to set up deductions on their earnings, other business structures like "Sole Proprietorship" or "Partnership" don't enjoy this benefit. For instance, medical expenses, life insurance or disability are completely deductible for corporations. On the other side, if a corporation has stocks of other corporation it receives the 80% of the share free of taxes.

Corporations also have other advantages like the possibility of obtaining capital by emitting stocks, bonus or any other kind of debt instrument. In case of the death of one of the proprietors, the enterprise can keep on working since the management is independent from the stockholders. Being a corporation, properties are easily transferable and making business is also much easier since banks will be more willing to interact than being face to face with a physical person.

There are varied structures of corporations and seeking out the one that will suit your business enterprise perfectly can be done with the help of an attorney and an accountant.

About The Author

Soeta Azieda is the CEO and supervisor of AHP Corporation which is a professional refernce for corpration advice.

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