Is it a Good Time to Talk to an Attorney About Incorporating?
One of the important tasks that a Conshohocken corporate law attorney can help you with is determining what type of business structure is best for you. Many people who own a business find that either a C-corporation or an S-corporation is the right choice. Incorporating provides many significant benefits compared with other types of business entities, but there are also some additional costs and complexities associated with being incorporated. You will need to carefully consider your options and the state of your company in order to determine if it is time to consider incorporating.
Curley & Rothman, LLC provides comprehensive advice to businesses at all phases of their development. Whether your business is a start-up just getting off the ground or whether you company is established and growing, our legal team can help you to make smart and strategic decisions. One of the decisions we assist with is determining if incorporation makes sense. If you determine that you wish to incorporate, we can also help you to take care of the formal process required to make your business into a corporation. Contact us today to learn more about the assistance we offer if you are considering incorporation for your organization.
Should You Consider Incorporating Your Business?
There are a variety of different factors to consider when deciding if you should incorporate your business. Some of the considerations that you should take into account as you try to decide if now is the time to incorporate include the following:
- Do you have significant personal assets? If your company is owned as a sole proprietorship, this means your business is the same legal entity as you. You and your company have no separation in the eyes of the law. If something goes wrong with your company, like a lawsuit, you could face personal liability and your own assets may be at risk. Because of the potential to lose personal assets, it is a good idea to incorporate any business you become an owner of- even as a startup- to protect your personal property.
- Is the business going to be taking on debt? If the company is going to be taking on debt, you may also wish to incorporate the business. Incorporation means the company becomes its own separate legal entity. If the corporation can earn credit, then the corporation can apply for credit without any of the owners guaranteeing the debt. The corporation can also enter into contracts (and take on resulting obligations) as its own individual entity. When you incorporate and the company takes on debt obligations, only the company is responsible for paying them- not you personally.
- Is your business growing? If your business is growing, it may be time to consider incorporating. Incorporating can make it easier for you to bring in new investors by giving them an ownership share in the form of stock shares. If you hope to ever take your company public one day, incorporating is also a smart choice.
- Are you concerned about how your business will transfer after death? If you have incorporated your business, you can make a strategic plan for the transfer of asset shares with the help of an estate planning attorney. The corporate form, with the ability to issue ownership shares, can facilitate effective estate planning.
- Do you want more flexibility with taxes? If your business is earning substantial profits, you may want flexibility in how those profits are taxed. If you are organized as a sole proprietorship, the company's profits are simply taxed on your income taxes as personal income. If you incorporate, you can choose from the S-corp form or the C-corp form, which are taxed differently than individuals. S-corps allow pass-through taxation and you can also take some of the business income as a distribution you do not pay Social Security taxes on. C-corporations are taxed and then owners are taxed when profits are distributed, so there must be steps taken to avoid double taxation.
You should also consider whether the benefits of incorporation- such as liability protection- are worth the costs and hassle of incorporating. The Pennsylvania Department of State provides a summary of the many requirements associated with incorporating a business. These requirements include advertising the formation of the corporation; choosing a corporate name that conforms to guidelines and that is available for use; and submitting Articles of Incorporation and a docketing statement with the Bureau of Corporations and Charitable Organizations.
Talk to a Corporate Law Attorney About Incorporation
A Conshohocken corporate law attorney at Curley & Rothman, LLC can provide you with help making decisions on incorporation and can assist you during the incorporation process. Give us a call at 610-834-8819 or contact us today to schedule your consultation and learn more about how we can help with your case.