Should I incorporate my business?

To answer this question one must first answer several questions:

  • How big am I planning to grow my company?
  • What type of business will my corporation be involved in and will I need additional personal liability protection?
  • Will I be more personally exposed if I don’t incorporate?
  • Will I be allowed to incorporate under the laws of the state I live in?

In today’s environment corporations have become the Holy Grail of starting a new business structure. Corporate structures can help protect you personally from various lawsuits, reduce taxes, can provide and have a wide range of benefits including 401k plans, various pre tax reimbursement plans (i.e. Section 125 reimbursement plans) and provide better access to capital from investors and banks.

A corporation is a separate legal entity which under its own name can open a bank account, own property, and do business. A corporation is managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors.

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