Corporate and Business Law > Advantages of Incorporation

Incorporation offers the following advantages:

Reduces Personal Liability: The shareholders of a corporation may loose the money they put into the company, and usually no more.

Tax Advantages - Deductible Employee Benefits: Incorporation usually provides tax-deductible benefits for the business and its employees including health insurance, life insurance, travel and entertainment expenses. Corporations usually provide an increased tax shelter for qualified pensions plans or retirement plans (e.g. 401K's).

Anonymity: Corporations can offer anonymity to its owners.

Easier Access to Capital Funding: Capital can be more easily raised through the sale of stock. Banks prefer to lend money to corporations.

An Enduring Structure: Corporations may continue on regardless of what happens to its individual directors, officers, managers or shareholders.

Easier Transfer of Ownership: Ownership of a corporation may be transferred, without substantially disrupting operations or the need for complex legal documentation, through the sale of stock.

Centralized Management: All decisions are made by the board of directors and shareholders cannot unilaterally bind the company by their acts.

Adds Credibility: A corporate structure communicates permanence, credibility and shows commitment.