A corporation is a separate and distinct legal entity created under the laws of a state. The individuals who are part of the legal entity are the shareholders, the board of directors and the officers. A corporation can legally enter into contracts, file lawsuits, be sued in a lawsuit, pay taxes, and conduct business. You should consult a legal profession before deciding whether or not to incorporate your business. The following are some of the advantages of operating your business as a corporation:

Limited liability. This is one of the most important reasons to form a corporation. Because a corporation is considered a separate legal entity, shareholders’ personal assets are not at risk to meet corporate obligations.

Treatment of Corporate Tax. A corporation is taxed separately from its shareholders at the corporate rate. Shareholders pay personal income taxes on the payments they receive from the corporation in salaries, bonuses, and dividends.
Stock market incentives. Corporations may offer stock or stock options to their employees as an employee benefit that can make employees more loyal to the company.

Employee benefits. A shareholder who is also an employee of the corporation may be eligible for a tax refund or deduction for health and life insurance, travel and other expenses.

Structure. Corporations consist of shareholders who own a corporation, and elect the Board of Directors. The Board of Directors hires officials. The officers are usually the chief executive officer and/or the president, vice president, treasurer, and a secretary. If the corporation is large, there may also be a chief financial officer, a human resources director, and other administrative officers. All officers are required to follow the rules and policies established by the Board of Directors. The officers manage the daily operations of the corporation.

Easy to attract investors. The corporation can sell its shares to investors, which gives them an ownership interest in the corporation and makes it more attractive to investors.
Uninterrupted existence. A corporation still exists even if the shareholders, board, and officers leave the business.

Transferable Shares. Corporate shares can generally be freely bought and sold, because the corporation is not affected by who the shareholders are. If the shareholders die or sell their shares, the corporation continues to exist and does not change. Of course, the transfer of shares may be regulated or restricted by federal or state securities laws.

For more information on these and other important business topics and for legal inquiries, please visit our website at http://www.IndigoBusinessSolutions.net
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