Incorporation – Bent Enterprise


An organization formed legally to perform business comprising of material resources and people, and has been licensed by the state is referred to as a corporation. Shareholders are those who own the corporation, the Board of directors are those who manage the business and the daily activities are managed by the elected officers of the corporation. There are corporate laws on tax which has to be adhered to, by the corporation. Also a corporation is required to regularly file its taxes, the corporate tax.

Other names for the corporation include Regular Corporation, C-Corporation and Standard Corporation. There are no limits on the number of shareholders in a corporation, and it can have both foreign and nationals of the country as part of the shareholders list. It could either be a publicly held corporation where the shares are offered to public on sale or a private corporation where there are no publicly held shares. In general, shareholders of a corporation will generally comprise of the founding members, few or all of the board members, venture capitalists or other private investors who are only shareholders but not part of the board.

A very commonly found corporation is the C-Corporation which is a business incorporated by the state and is a for-profit organization. In this case the registration of the corporation is done with the authorities of the state and it has to follow the state laws in the state of incorporation.

Shareholders of a corporation are protected to a certain extent from the liabilities of the corporation, commonly referred to as “limited liability.” In case of C-Corporation though, there is double taxation which means not only will there be a tax on the profits earned by the corporation but the shareholders are again taxed on what they receive as dividends or profit sharing or distributions of other kinds from the profits.

If you want to incorporate your organization, you would first need the name for your business to be registered. Then you have to file an incorporation certificate, also known as the articles of incorporation along with a fee. There is also a requirement for you to make a draft of bylaws for the corporation and hold a meeting with the board of directors of the organization.

Why is incorporation a requirement?

When you are doing any business, you would want to keep your personal assets safe and the best way to do so is to keep your business incorporated. There are many business owners who get their businesses incorporated mainly for this purpose. However that is not the only benefit one can reap from incorporation of their company.

When you have a corporation, you have the option to save on your tax money, improve the flexibility of your business, lesser audits and lesser complication when raising the capital, and of course you get access to tools that help you itemize better.

Benefits of incorporating

  • Liability is limited: There is no connection between the owners or the shareholders with that of the corporation as such. Of course, there will be a few exceptions. Barring that, whenever the defendant is a corporation, the shareholders /owners are not liable for any obligations or debts laid by the corporation. Incorporation is also known as corporate veil as it gives a layer of protection to the share holders in addition to other forms of insurance.
  • Lower tax rates: Plan your business well and you will be surprised at the extent to which your tax rates are lowered. When you have a business that is incorporated you are prone to gain more in terms of tax, based on the income of your business. Despite the amount of profit you make as a young business owner, when you have an incorporated business, you will still stand to gain quite a few favorable deductions. Some of these deductions will not be available if you are not incorporated. For instance, the salary that you pay yourself and your employees is a case of an expense which is entitled to deduction.
  • Lesser IRS audits: IRS generally targets the businesses that have a higher gross income than the ones that are incorporated. Despite your level of income, you will find the likelihood of getting an audit much lesser than other businesses.
  • Remain anonymous: If you choose the state of incorporation wisely, then you can even keep the names of the owners and shareholders are not published anywhere. In fact some states even allow you to keep the elected officers and board of directors anonymous.
  • More credible: With an incorporation you are projecting your business with more permanence and make your business more credible than if not incorporated.
  • Capital funding made easy: Another important benefit with incorporation is that you can easily attract many investors to fund your capital by selling the stock.
  • Ownership transfer made easy: There will not be any disruption to the daily operational activities if you want to transfer ownership of the corporation as you can do so by simply selling your stock. There is no need to go through legalities in papers which further reduces complication and complexity.
  • Shared ownership: When you own the shares in a business, you have an upper hand in capitalizing the business and it also helps with employee retention. When you want to capitalize, you can simply take the C-Corporation public by issuing stocks through the IPO (Initial Public offer) and you can also issue stock options to your employees, binding them permanently with the company, improving employee retention rate. This is a very common practice followed in the hi-tech sector.
  • Lasts longer: With no dependency on the owner, as the corporation is carried by the board of directors, there is no limitation of the corporations’ lifetime with that of the owner.

Drawbacks of C-Corporation

There are a few drawbacks to having a C-Corporation. The major one is that while the corporation is taxed when it earns profits on its shares, there is no deduction given at the time of distribution of the same to its shareholders. At the time of dividend distribution, there is again a taxation levied on the amount distributed at the shareholder level, which is referred to as the “double taxation.”

Also, when the C-Corporation suffers a loss, this cannot be deducted from the income of the shareholders/ owners of the organization.

LLC and S-Corporation are other types of incorporation for businesses. Every corporation, C-Corp, S-Corp and LLC have their own advantages and limitations and each outweighs other in different aspects.

If you have decided to incorporate your business and you want our assistance, we would be happy to fill in and file your application for incorporation. To get professional assistance for incorporation of your business, you can simply fill in the form for order and we will get in touch with you.

You can also get in touch with our support executives through phone or email as per your convenience.

The services offered by our company are professional and are designed to make sure that your company’s incorporation documents are prepared in compliance with regulations and filed with accuracy.