Business Law 101: The Benefits of Organizing as a Corporation

When starting a new company, one of the first decisions you will have to make is figuring out which type of business entity to use. The way you structure your company is important because it will determine a lot of things, like how much you pay in taxes and your ability to raise money. There are several different types of business entities, but this blog is here to talk about the benefits that your California business can see by choosing to structure as a Corporation such as:

  • Access to capital

Incorporation allows you to be much more flexible in the way that you raise money because corporations are allowed to issue shares of stock and have more shareholders and part-owners than other kinds of business entities. It’s for this reason that if you are a start up that intends to go public in the future, it is a good idea to incorporate from the start to keep your options open.

  • Protect your personal assets

When you incorporate, your business becomes formally recognized by its state of incorporation, meaning that it is now its own separate legal entity from you. This means that it can own property, incur liability, and sue or be sued separately from you. It essentially protects those who started it from being personally liable for anything done by the business itself.

  • Enhance credibility

It goes without saying that if your business is incorporated and legally recognized by the state, that you are officially recognized by whomever you do business with as a registered, credible entity

  • Anonymity

Owners of corporations do not need to make their personal information public because the corporation is its own legal entity. Keeping one’s personal identity a secret from the general public is important to a lot of business owners, particularly if they are more of a passive owner that does not really have a hand in the day-to-day operations of the company.

  • Endurance

Corporations are built to last in that they can carry on regardless of what happens to its original founders. Unlike a sole proprietorship or other small business entity, the company does not disappear and is not forced to shut down if an owner leaves or dies. Instead, founders and owners can step down and remove themselves from the corporation without any worry that their business can’t carry on.

Speak with an experienced business law attorney.

If you are getting ready to start your own business, it’s important to consult an experienced business law attorney to help guide you throughout the process—particularly if you are planning to incorporate, as there are many federal and state laws and regulations that you have to follow to make sure everything is done right. At IGC, we regularly help business owners get their companies set up and ready to run smoothly. If you need help incorporating your business, please don’t hesitate to contact us today!

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.