Business Incorporation - Is It A Necessity?
If you're thinking about starting your own business, then business incorporation needs to be something that sits on the top of your to-do list. Whilst it's all good and well to call yourself a business when you begin exchanging goods and services for cash, your business is really nothing more than a hobby, and in most cases, an illegal hobby.
If you haven't filed the correct paperwork to officially enterprise your business as a corporation, then technically it doesn't exist and you're probably evading all sorts of tax deductions, and also missing out on the basic liability insurance that would otherwise cover your corporation if you had followed the basic business incorporation procedure.
What Organizations are Required to Follow Business Incorporation?
Basically all organizations must follow the business incorporation strategy. Whether you're just starting small business operations, or have been operating for some time, it is strongly advised that you follow the recommended procedure.
The corporation may be a business, (such as a computer shop or convenience store) a non-profit organization, (such as a fire brigade, charity, or an opportunity shop), a sports club looking to register officially, or a Government entity for a particular city, town or region.
There is much confusion for small businesses that work their trade on a low-scale, for example, at local markets or over small web-pages based on the internet.
In reality, despite its obvious impracticality, even a ten year old child running a lemonade stand out the front of their parent's house should follow the business incorporation procedure.
The Incorporation Process:
Despite its seemingly daunting nature if you're starting small business operations, the incorporation process is simple and consists of only a number of steps. Firstly an Article of Incorporation is filed with the appropriate state office, which will list the purpose of the corporation, its business strategy, the location of the business, whether or not it's a private or publicly listed company, and how many shares of stock it has, and how they are distributed.
It is generally recommended that a legal representative be empowered to aid in the production of these documents, such are their importance. Secondly, the corporate name needs to be finalized as part of the Articles of Incorporation, which needs to be unique and contain a distinctive element, a descriptive element, and a legal ending to their name.
For example, in the business name 'Geoffrey's Shoes Incorporated', the distinctive element would be the name Geoffrey, the descriptive element (which usually describes what goods or services the business intends to sell) is Shoes, and the legal ending that has been chosen is 'Incorporated'.
Limited and Corporation are also acceptable legal endings to business names. The final step would be to develop and agree to a set of corporate by-laws, which must also be filed with the state.
These outline many important policies and procedures which the organization is required to follow. Information included would be the outline of predominantly housekeeping details regarding shareholder meetings, and other information regarding the corporation's stakeholders.
The Benefits of Business Incorporation:
There are countless benefits that can be attributed to the business incorporation process, but the most important would have to the protection of personal assets that is gained by the Incorporation process.
Sole proprietors are generally not protected by any form of personal assets insurance, and if involved in a lawsuit or face the prospects of bankruptcy, they can find themselves with nothing - and damages can be taken from their personal assets, such as houses and motor vehicles that the organization may own.
However, if properly registered and incorporated, no more than their organizational investment can be lost.
Taxation issues become more simplified and convenient matters, as in the United States, corporations are taxed at a lower rate than individuals, making the company more financially viable.
Retirement funds are established far easier, and by-the-books, which is always encouraging, and the organization is able to be transferred to another owner at any point in time, which the current state of economic roller coasting, can certainly appear as an attractive proposition for a business not travelling too well.
Other countries have their own adaptations to business incorporation, but the United States system is by far the most practical. It's easily filed and administered and is governed by suitable laws and practices. These adaptations occur all over the world, but are generally based on the US system; such has been its popularity at a conceptual level.
Implementing an initial business strategy that is based around Business Incorporation is strongly recommended, and should be followed by any organization looking to start a corporation, whether it is on a large scale, or at entry-level small business operations. If you're intending to go serious with your business, then business incorporation is an absolute must!
If you haven't filed the correct paperwork to officially enterprise your business as a corporation, then technically it doesn't exist and you're probably evading all sorts of tax deductions, and also missing out on the basic liability insurance that would otherwise cover your corporation if you had followed the basic business incorporation procedure.
What Organizations are Required to Follow Business Incorporation?
Basically all organizations must follow the business incorporation strategy. Whether you're just starting small business operations, or have been operating for some time, it is strongly advised that you follow the recommended procedure.
The corporation may be a business, (such as a computer shop or convenience store) a non-profit organization, (such as a fire brigade, charity, or an opportunity shop), a sports club looking to register officially, or a Government entity for a particular city, town or region.
There is much confusion for small businesses that work their trade on a low-scale, for example, at local markets or over small web-pages based on the internet.
In reality, despite its obvious impracticality, even a ten year old child running a lemonade stand out the front of their parent's house should follow the business incorporation procedure.
The Incorporation Process:
Despite its seemingly daunting nature if you're starting small business operations, the incorporation process is simple and consists of only a number of steps. Firstly an Article of Incorporation is filed with the appropriate state office, which will list the purpose of the corporation, its business strategy, the location of the business, whether or not it's a private or publicly listed company, and how many shares of stock it has, and how they are distributed.
It is generally recommended that a legal representative be empowered to aid in the production of these documents, such are their importance. Secondly, the corporate name needs to be finalized as part of the Articles of Incorporation, which needs to be unique and contain a distinctive element, a descriptive element, and a legal ending to their name.
For example, in the business name 'Geoffrey's Shoes Incorporated', the distinctive element would be the name Geoffrey, the descriptive element (which usually describes what goods or services the business intends to sell) is Shoes, and the legal ending that has been chosen is 'Incorporated'.
Limited and Corporation are also acceptable legal endings to business names. The final step would be to develop and agree to a set of corporate by-laws, which must also be filed with the state.
These outline many important policies and procedures which the organization is required to follow. Information included would be the outline of predominantly housekeeping details regarding shareholder meetings, and other information regarding the corporation's stakeholders.
The Benefits of Business Incorporation:
There are countless benefits that can be attributed to the business incorporation process, but the most important would have to the protection of personal assets that is gained by the Incorporation process.
Sole proprietors are generally not protected by any form of personal assets insurance, and if involved in a lawsuit or face the prospects of bankruptcy, they can find themselves with nothing - and damages can be taken from their personal assets, such as houses and motor vehicles that the organization may own.
However, if properly registered and incorporated, no more than their organizational investment can be lost.
Taxation issues become more simplified and convenient matters, as in the United States, corporations are taxed at a lower rate than individuals, making the company more financially viable.
Retirement funds are established far easier, and by-the-books, which is always encouraging, and the organization is able to be transferred to another owner at any point in time, which the current state of economic roller coasting, can certainly appear as an attractive proposition for a business not travelling too well.
Other countries have their own adaptations to business incorporation, but the United States system is by far the most practical. It's easily filed and administered and is governed by suitable laws and practices. These adaptations occur all over the world, but are generally based on the US system; such has been its popularity at a conceptual level.
Implementing an initial business strategy that is based around Business Incorporation is strongly recommended, and should be followed by any organization looking to start a corporation, whether it is on a large scale, or at entry-level small business operations. If you're intending to go serious with your business, then business incorporation is an absolute must!