The Ins and Outs of Incorporation
	Author: Harmik Simon Incorporation

Incorporation, which is abbreviated as Inc, is a special type of corporation in the United States.  Many different types of organization can choose to become incorporation.  These include non-profit organizations, businesses, government entities, cities, and towns.

There are many benefits to incorporation, regardless of the type of entity.  These include:

• Protecting personal assets
• Developing a unique credit rating
• Making ownership transferable
• Offering retirement funds
• Enjoying tax breaks
• Obtaining funds through stocks
• Becoming more durable

When an entity decides to engage in incorporation, the personal assets of those involved in the business are protected.  The same is not true when a business is a sole proprietorship or when it is a partnership.  In both of these cases, the owner or owners are financially responsible for the business.  With incorporation, on the other hand, the directors, stockholders, and officers are not responsible for the liabilities of the business.

Since a corporation is its own entity, it also receives its own credit rating.  Therefore, forming an incorporation helps to protect the credit ratings of those involved with forming the business.  In fact, the corporation can form its own credit history, which is completely separate from that of those involved with the business.

Incorporations also make it possible to transfer ownership easily.  Though some states make this process easier than others, transferring the rights of the incorporated business is always easier than transferring ownership for a sole proprietorship or partnership.

Becoming incorporated is also advantageous when it comes to taxing.  In fact, corporations are taxed at a rate that is much lower than the rate at which individuals are taxed.  In addition, corporations can own shares in other corporations and take advantage of corporate dividends, which are 80% tax free.  Another perk is the fact that corporations do not have limits on the losses they can move to subsequent years, while a sole proprietorship cannot claim capital losses of more than $3,000.

Incorporation also allows the company to raise capital by selling stock.  As a sole proprietorship or partnership, a business can still raise funds through investors.  The process of selling stocks, however, makes it easier to obtain investors and to raise capital quickly and efficiently.

Unlike a sole proprietorship, which ends if the sole owner quits or passes away, a corporation has longevity.  In fact, it does not depend upon each of its directors, shareholders, or officers in order to exist.  Since the corporation is its own legal entity, it will continue to exist even if any of these individuals leave the company or pass away.