Incorporation in Alabama
Alabama law allows a business to incorporate and be identified as its own legal entity. As a separate entity from the owners, the business is then considered to be operating on its own when it buys and sells property, assents to contracts and exercises legal rights. The Alabama Secretary of State receives and processes applications for incorporation, which must be submitted in compliance with local guidelines.
Benefits of Incorporation in Alabama
There are distinct advantages to incorporating a business. Most importantly, liabilities the business accrues may be satisfied only by assets that the owners have specifically invested in it. If the business had remained a personal asset of the owners, they could run the risk of losing their personal property to pay for the company's financial liabilities in case of default. Furthermore, a business that has not incorporated puts the unnecessary burden on creditors in the Birmingham area to evaluate the credit worthiness of individual owners rather than that of the business, making loans more difficult. Finally, a corporation's ownership stake is divided into equal slices or "shares" of stock, which make investments in the business much easier to transfer.
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Life in Birmingham
As Alabama's biggest city with over 225,000 people, Birmingham is also the county seat for Jefferson County. The greater metropolitan area of Birmingham is estimated to have a population exceeding 1.25 million.
Founded in 1871, Birmingham has a diversified economy, with an original base of manufacturing other businesses and industries such as banking, transportation, telecommunications, power transmission, education, medical care, and insurance have all risen in importance. Coal mining remains a large business and the trucking industry has grown with the advent of the interstate highway system.
Birmingham, AL is an excellent place for those in the legal profession, with prestigious law schools such as the Birmingham School of Law, Cumberland School of Law and the University of Alabama School of Law located there. The telephone directory lists over 3800 Birmingham lawyers.
Costs of Incorporation
Incorporation comes at a price. First, Alabama might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. The incomes of owners as individuals are also taxed of course, meaning that income to the corporation might be subject to double taxation. However, this disadvantage can be avoided with proper planning and help from a local Birmingham lawyer.