INCORPORATION is the legal process used for forming a company or a corporate entity . The corporation carried out their business, a not for profit organization, a sports club, or a government of a newly formed city or a town.
Specific incorporation requirements differ on a state to statebasis. However, a few common pieces of information that are to be included in certificate of incorporation such as:
- Business Purpose
- Corporation name
- Registered agent
- Share par value
- Number of authorized shares of stock
- Preferred shares
- Legal address of the company/corporation
There are several legal benefits that come with incorporation.
The most significant benefit achieved by incorporating is the protection of personal assets from the lawsuits and the claims of the creditors. In case of sole proprietorship and partnership the owners are personally and jointly responsible for the liabilities incurred in the course of their business, the stockholders, directors and officers of a corporation are not typically liable for the debts of the company. Their liability is limited to the extent of the amount that they have invested in the company. Also incorporated companies have perpetual existence, i.e., the existence of the company is not affected by the bankruptcy, insanity or death of members or directors.
Another benefit is that corporations in the US can sometimes be taxed at a lower rate than the individuals. Also the corporate dividends earned by a company from the respective share owned in other corporations are 80% tax-free.
Confused as to which type of Business to incorporate – LLC, OPC, Pvt. Ltd or Others?
There are many variants of businesses to choose from, which makes choosing a type of business as difficult as choosing a vehicle. Difficult or not, this is the most important decision that you can take for your business as there is always only one type which is the best suited for your ideas.
Here are the different forms that your business can take:
Sole Proprietorship: It is the simplest form of business owned and controlled exclusively by one person who is responsible for the business, its profits and alsoit’s debts.
Partnership: It is a type of organization where two or more persons(persons being individual, corporations,LLP, LLC’s, trusts or others) carry on the business for profit as co-owners. The ownersget to distribute the profits but at the same time are also responsible for all the debts of the partnership. There are three kinds of partnerships: General Partnerships, Limited Partnership (a partnership with a limited liability) and a joint venture.
Limited Liability Company: This is a rather new classification that is not allowed in most states. LLC’s are extremely flexible and can be used for a wide range of businesses. Like partnerships, LLC’s can be as a simple or complex as a members desire. LLC’s may be termed as limited liability corporations but are taxed and operated as a partnership.
Corporation: It is a legal entity formed, under the laws of the state, by an individual(s).
The two kinds of corporations that can be identified are – a BUSINESS corporation and a NON-PROFIT corporation.
- A corporation formed for the purpose of transacting business and making profits is referred to as a Business Corporation.
- A corporation formed for advancing an objective other than making a profit can be termed as a Not-for-profit Corporation. Charitable, benevolent and educational organizations usually fall under this category.
Choosing the best form of business is as important as the execution of the idea. At USATAXX you can find a highly qualified team of CPA’s, CA’s and MBA Graduates who can assist you right from choosing the type of organization best suited to your needs to completing your incorporation procedure so that you can take your organization off the ground.