What is a Business?
A business that is legally registered with the state and federal government is often called a corporation.
A corporation is a “legal person” formed separately from those who own and operate the corporation. It is called an entity because it is not a living person, it is actually an “artificial person” with its own legal rights, liabilities and responsibilities.
As an “artificial person” the corporation’s debts and taxes can be separated from its owners (shareholders) or its officers and directors, thereby offering personal liability protection, tax advantages and a way to borrow money that does not report on the owners personal credit.
Why Incorporate?
Why should you take the time and trouble to form a business entity like a corporation or an LLC?
Incorporating can offer you many advantages that you will not enjoy if you engage in business or investing activity in your personal name.
Understand that you will put your personal assets at risk and be personally liable for any legal issues that arise unless you do your business activity under the name of a registered business entity.
In addition to personal liability protection, incorporation assures attractive tax benefits and financing advantages. Corporations can also own real estate, automobiles, yachts, or aircraft without the owner’s personal name being attached to the asset or debt.
And because the corporation continues to exist even after the death of a shareholder, it offers tremendous estate planning advantages.
Tax Savings!
How much could you save on taxes by owning a business?
Corporations are entitled by law to numerous tax deductions that are not available to individuals. Corporations have a lower federal tax rate at all levels of income.
The cost of forming and registering a business entity can be immediately recovered in tax savings.
How to Start a Business
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