There is a reason so many businesses today are organized as corporations. Incorporating your business benefits you and the business alike for financial, publicity, and practical reasons. Moreover, the business incorporation process is straightforward and relatively quick in many states.
Many businesses incorporate for one major reason: protecting the owners from personal liability. A corporation is a legal entity that is treated like a person in that it is responsible for its own debts. If a corporation goes into debt, creditors must seek payment from the corporation, not from its officers, directors, or shareholders’ personal assets (except in rare instances).
Further, corporations’ officers and directors often cannot be held liable for the corporation’s wrongdoing, unless the officer or director directly participated in or ordered the wrongdoing. The corporate structure provides a degree of protection to officer and director actions in this way. However, officers’ and directors’ duties are ultimately to the shareholders of the corporation and require them to act in the corporation’s best interests.
Speaking of shareholders, they are the owners of a corporation by way of owning shares of stock. Another advantage of incorporating a business involves the ease with which ownership can change by buying or selling stock. Corporations also can increase or decrease the number of shares available. This flexibility can increase the ability of a business to grow and develop by attracting new investors.
If you are looking to assemble a management team or even to take a step back from managing your business, incorporating can be a great option. Officers and directors assume some decision-making and management power. You can retain ownership of shares of stock in the corporation while allowing others to run the day-to-day operations of the business.
Corporations pay taxes on their profits, and shareholders pay taxes on dividends disbursed from the corporation. In contrast, in a partnership, the partners must report all profits on their individual income tax returns. Tax rates for corporations tend to be lower than those for individuals, so even though shareholders pay tax on dividends (which represent only a portion of the money made by the corporation), the overall tax situation can be more advantageous than with a different business structure.
Finally, another benefit of incorporating is that corporations outlive changes in management and can continue into perpetuity if not dissolved. This permanence can lend credibility to your business and show commitment to its future.
Wyoming Corporate Services Inc. has been helping people like you incorporate for over 16 years. Check out our list of services and prices to incorporate a business in Wyoming with ease. Please contact us if you would like to proceed forward and explore the pros of incorporating your business.