Starting a corporation involves filing the Articles of Incorporation (also called a Charter, Certificate of Incorporation), listing the purpose of the corporation, its principal place of business and the number and type of shares of stock.



It's important to carefully consider the type of business entity that is right for you. You may feel an LLC is more suitable for you because it is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners.

Yet there are important legal benefits to incorporating your business. The primary benefit is the safeguarding of personal assets against the claims of creditors and lawsuits. Individual proprietors and general partners are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable and legal judgments.

In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. If one is personally involved in a lawsuit or bankruptcy, assets such as boats, cars and houses may be protected.

You can also easily transfer ownership of a business to someone else, either in whole or in part depending on the state. For instance, a person with a Delaware Corporation can transfer ownership of a corporation and not be required to file or record the transfer.

Another factor that makes incorporating a good decision is taxation. In the United States, corporations are taxed at a lower rate than individuals. In addition to the lower tax rates there are no limits on the amount of losses a corporation may carry forward to subsequent tax years.

Also corporations have the ability to raise funds through the sale of its own stock. You can raise capital from investors for your corporation easily through the sale of your stock. This can be crucial for expanding and developing a business.

Forming a corporation can also mean durability. Its existence is not affected by the death or absence of shareholders, directors, or officers of the corporation. In essence your corporation can exist indefinitely.

A corporation also has the ability to establish its own credit rating. Regardless of an owner's personal credit scores, corporations acquire their own credit rating, and build a separate credit history by applying for and using corporate credit.

Incorporating can be accomplished easily today in a number of ways. There are online resources where you can download incorporation forms or have a legal service complete the application process for you.

Ultimately you need to determine what your business goals are and decide if forming a corporation will work for you. Incorporating today has become a crucial step for many new business owners seeking to protect themselves and their business.