Arkansas 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. A business looking to incorporate in Arkansas must file with the Secretary of State in accordance with established guidelines.

Benefits of Incorporation in Arkansas

An incorporated business enjoys certain advantages, the most important being a limit of liability for the shareholders. The most shareholders can lose is the amount they invest in the business. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. A corporation might also find it easier to finance itself through loans, allowing creditors in the Pocahontas area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Lastly, ownership of a corporation is divided into equal portions or "shares" of stock, which may be bought and sold much more easily than the ownership of an unincorporated business.

Costs of Incorporation

There are costs associated with incorporation, both short and long term. First, businesses in Arkansas might be charged a fee to incorporate. Also, a corporation is taxed 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 Pocahontas lawyer.