Tax breaks and protection of shareholders from being personally liable for corporate debts are the two main reasons why business owners choose to incorporate. Another advantage is that the corporate entity and its assets remain intact in the event of the death of a shareholder, to prevent against corporate instability.
Protection against personal liability means that shareholders are shielded not only from bankruptcy but from civil judgments and even some criminal acts that attach to the corporation. If a corporation declares bankruptcy, credits can attempt to recover their losses from shareholders, directors and officers only to the extent of the shareholders, directors and officers’ investment in the business.
Choosing a name for your corporation is important. Although it’s not a legal requirement that your business have a trade name, or name under which you are doing business, you’ll most likely want to file for a “dba” or fictitious business name. “DBA,” which means “doing business as,” is exactly what it says. Although your corporation may be called ABC Widgets, Inc., you will probably want to name the facility you open to make or sell those widgets something different. If you choose, for example, The Friendly Widgets Company, then The Friendly Widgets Company is the name under which you’ll be trading. As such it requires the filing of a DBA.
The name of your company is often the first thing a customer knows about your business. First impressions do count! In the case of The Friendly Widgets Company, the name states the product you make or sell and how you do it—i.e., in a pleasant manner without fuss or muss. Your name is also valuable as an asset of the company and can even be trademarked so no one else can use it.
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