Corporations Overview: Legal Structure

Getting Started - Legal Structure
Corporations Overview

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Corporations Overview

Since the corporation is considered a distinct legal entity with no ties to the individuals who own it as a legal structure, it is a very attractive option for small business owners. Incorporating is, however, a complicated undertaking. It gives you the opportunity to present your firm to the public as a bigger company than it actually is. It also gives you a better shot at obtaining long-term financing. Since you are not held personally responsible for the corporation, your personal assets, including your personal bank accounts, may remain untouched if the business fails. There are, however, more regulations and government filings to deal with than there are in sole proprietorships and partnerships.

Before you decide to incorporate, ask yourself

•How much risk are you willing to absorb?

•If something happened to the principal(s), how long would the company be able to function?

•What legal structure would offer the greatest flexibility in terms of administration?

•How will the laws of the incorporating state influence your decision on method of incorporation?

•What are your prospects for attracting capital?

•What is the goal of your enterprise?

•Are you willing to share control of the business with outsiders?

•Is there a tax advantage or incentive for you to incorporate?

* Source Streetwise Small Business Start-Up

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