Are You Considering Incorporating Your Business?

A “C” corporation is a legal entity, which exists separately from its owners.

Advantages

• Allows capital to be raised more easily through the sale of stock
• It can continue after the founders or if key individuals leave
• Enables employees to participate in beneficial health insurance and life insurance group policies, and also allows for profit sharing and retirement plans.

Disadvantages
• Double taxation - Because the corporation is a separate legal entity, the corporation pays income taxes on the money it makes. In addition, employees and owners also pay taxes on any wages or dividend that they are paid by the corporation. However, because many costs of doing business are deductible (such as salaries, rent, employee benefits, and other business expenses) there may be very little income on which to pay tax.
• Expensive to create and maintain. You usually need the advice and help of an attorney to make sure you do the paperwork correctly, and to staying incorporated requires an annual fee.
• Subjects the owners to many legal requirements.

Some of the major corporate legal requirements:

• A corporation must file Articles of Incorporation with the Secretary of State. The corporation must have written Bylaws and elect a Board of Directors
• The Board of Directors is responsible for the management of the corporation, and must hold regular meetings. The Board is required to elect officers, authorize opening a bank account, and authorize the issuance of any stock.
• There must also be an annual shareholders meet to vote on major issues, if any
• Minutes must be kept for the Board of Directors meetings and the annual shareholders meeting.
• Corporations are required to elect certain officers, the President, the Chief Financial Officer, and the Secretary.