What is a corporation?
A corporation is an independent, legal business entity that is separate from the people who own and operate it. This form of business operation is owned by shareholder(s) and guided by officer(s) authorized to act as a single entity.
What are the main pros and cons of running a business as a corporation?
Considering a breakdown of the corporation advantage and disadvantage will offer you a better understanding of whether
- Protection for personal assets: creating a corporation protects most personal assets. Stockholders, CEOs, officers and directors are not liable for obligations or debts.
- Anonymity: if you want to open a small business and would like to prevent your involvement from being public knowledge, setting your business entity up as a corporation might be your best option.
- Transfer of ownership: corporations can easily transfer ownership without having to be completely sold off.
- Lower taxes: in the United States a corporation can generally receive a large tax break over other company formations. This lower taxation bracket makes a strong argument for many growing companies to incorporate.
- Improved credibility: corporations are generally more trusted than other types of businesses because they have a tendency to spread out and have longevity.
- More difficult to form and costly to maintain: a corporation is generally more difficult to form than some other business structures and it requires maintenance to continue each year. The structure of a corporation will require fees to be paid, state forms to be filed and annual reporting to be done in order to remain open and in good standing.
- Difficult tax strategy: As much as a corporation can receive some tax benefits, some structures include corporation double taxation. A c-corporation is taxed not only on its profits but shareholders are taxed on their earnings.
What information do I need to register my Corporation?
To get started with registering a corporation you need to have:
- The address of your Corporation
- The name of your registered agent (Contact for info on your corporation)
- The names of the corporation’s directors and officers
- The name of your Corporation