For many entrepreneurs who are finding their businesses growing as the economy recovers, this might be a good time to consider incorporation. The Houston Chronicle offers some insight on incorporating a business to gain legal benefits.The legal structure of a company will dictate the tax benefits, investor liability, and certain management issues.
Some entrepreneurs may be lured by the idea that sole proprietorships do not require any paperwork or filing, but business owners should be forewarned that entrepreneur and entity are interchangeable under this structure. This means business owners are responsible for all of their business’ debts and liabilities.
On the other hand, corporations come with some required filing procedures to establish a business as a legal entity, but they also come with benefits that spare business owners the expenses of failed transactions or bankruptcy.
The Huoston Chronicle explains that corporations pay taxes, while entrepreneurs and investors will – at most – be taxed only on certain dividends. Different entities offer different levels of liability, but each one guarantees that founders and businesses are legally distinct.
To learn more about the benefits of different business types and how to incorporate a business, entrepreneurs can seek the council of professionals at an incorporation service. Investing in the filing fees could really pay off; one business consulting firm reports that many lenders prefer to invest in corporate entities.