New York, NY (PRWEB) March 29, 2005
If you tell a new business owner that they could loose their house over their new "widget" they stare back in horror. This is one extreme example of the importance of incorporating your company online to protect your assets -
Forming a corporation or a limited liability company is called Incorporating. Getting registered as a corporation can also be an online process where you have to select a state of filling and the type of entity that could be non-profit, profit or a professional corporation. Individuals incorporate their business because of its many inherent benefits. For example, if a business fails, incorporation protects an individual against the need to sell off his personal assets. In case of sole proprietorship or partnership the personal belongings of an individual become liable for paying off the companyÂs debts.
Incorporation also has added advantages like tax saving over partnership or sole proprietorshipÂs business. Various schemes like pension, medical, ownership of stock in other corporations, disability insurance premiums, stock ownership plans also help in bringing down the tax liability.
Types Of Incorporation
Small and big corporations generally use a business corporation. This has the advantage of minimum restrictions, unlimited stockholders and an assurance of protection for individual property. Under this the liability of a stockholder is limited to the amount of investment in a business.
Limited Liability Company (LLC)
Limited Liability Companies has a separate entity from its members. MemberÂs rights, duties and obligations are governed by an operating agreement. The agreement is particularly important in deciding how the company and its members will be taxed for federal income tax purposes, management policy, terminating the LLC and transfer of interests. Under this agreement all the members have limited liability provision and enjoy full security of their personal assets.
Businesses that undertake varied activities with an aim to do good for the society should be registered as non-profit incorporations. The income earned from the business is used for charitable, religious, educational or scientific activities. The motive of the business is not to make profit. Income generated by most of these organizations is exempted from income tax.
It is taxed under Subchapter S of the Internal Revenue Code. IRS approval is required for Subchapter S status. All earnings or losses are passed directly to the personal income tax return thus avoiding the case for double taxation.
Learn more about incorporating online:
Reprint rights: You are free to use / reprint this article - please just include the below copyright and URL / link to website:
(C) 2005 Incorporating-Online.org
# # #