Small business ownership is a risky venture, but you can limit personal liability by incorporating your business. If you incorporate a business in the New York City area, have a New York incorporation lawyer guide you through each step of the process.
What are the benefits of incorporating your business, and what’s the best way to do it? Keep reading this brief introduction to incorporating a business in New York, and you will learn the answers to these questions.
Benefit #1: Incorporating Protects an Owner’s Personal Assets
Incorporating is an effective, legal way to protect a business owner’s personal assets. As distinct legal entities, corporations are liable for their own debts. In most cases, a corporation’s creditors cannot “go after” the personal assets of the corporation’s shareholders, directors, or officers.
This protection allows a business owner to conduct business without placing homes, vehicles, or savings at risk. By contrast, the owners of sole proprietorships and partnerships may face unlimited liability for their personal assets as well as their business assets.
Furthermore, if you don’t incorporate, your personal assets may be at risk from anyone who sues your business. If a customer trips and breaks a leg in your store, or if a pedestrian is injured by your delivery driver, and you haven’t incorporated, you may be personally liable.
Benefit #2: It’s Easier for Corporations to Raise Capital
Issuing shares of stock allows a corporation to develop and prosper over time. Corporations are more attractive to investors than sole proprietorships and partnerships, and banks prefer lending to corporations rather than unincorporated businesses.
Benefit #3: Incorporating Enhances the Credibility of Your Business
Incorporating enhances your reputation. Suppliers, clients, investors, and lenders–and in fact the public at large–view corporations as more stable and reliable than other businesses. Incorporating expresses your dedication to operating a stable, long-term business venture.
Benefit #4: Corporations May Endure Over Time
Philadelphia Contributionship (an insurance firm) and Caswell-Massey (a soap and perfume company) were incorporated in 1752. Corporations may operate for decades or even centuries, no matter what happens to the directors, managers, officers, or shareholders.
The endurance of a corporation will let you create long-term business plans and establish a strong foundation for your business.
Benefit #5: Incorporating Makes Business Succession Planning Easy
A corporation’s endurance offers a genuine advantage when it’s time for succession. You may plan a gift, a sale, or a purchase by your family. Whatever option you choose, the corporation and all its contracts and leases will remain in place.
Benefit #6: Corporate Ownership Is Easy to Transfer
When an owner leaves, even if the owner has not planned for succession, incorporation lets that owner’s interest pass easily to another owner or a new owner. Shareholders may freely transfer their interest in a corporation to another party without the consent of other shareholders.
Benefit #7: Owners Have Anonymity
If you don’t want your involvement in a business to be on the public record, incorporating the business is your solution.
Benefit #8: Incorporation Gives Limited Protection to Your Brand
Incorporating in New York registers your business name with the New York Department of State. Upon its approval, that business name is yours alone to use in the State of New York and cannot be used by another business in this state.
However, to obtain brand protection in the other states, you’ll need to have a New York business attorney help you register your trademark with the U.S. Patent and Trademark Office.
Benefit #9: Corporations Enjoy Considerable Tax Benefits
Corporations are subject to different tax rates than individual taxpayers, so incorporating separates your business and personal income taxes.
When you incorporate your business, a number of tax deductions are available that are not available to sole proprietorships and partnerships. For example, you can deduct startup expenses, operational costs, and employee benefits.
Benefit #10: Record-Keeping Requirements Are Stricter
Although some may see additional record-keeping as a disadvantage of incorporating, you can take advantage of the stricter record-keeping requirements for corporations.
Precise records make it easier to secure loans and attract investors. Those records can also give you a clear picture of where you may need to make changes to improve your company’s profitability.
What Else Should You Know About Incorporating?
A New York incorporation lawyer advises and guides business clients through every step of the incorporation process and can provide a number of other business-related legal services to clients in the New York City area.
To learn more, or to begin incorporating your business right away, contact our business attorney in New York City at 718-237-0411. It’s one of the smartest business investments you can make.