Colorado law allows a business to incorporate and be recognized as its own legal entity. After incorporation, buying and selling property, assenting to contracts and exercising legal rights are considered acts of the business itself and not its owners. A business seeking to incorporate in Colorado must file with the Secretary of State in accordance with established guidelines.
Benefits of Incorporation in Colorado
Certain benefits inure to a business in Colorado that has incorporated over one that has not. First, a corporation's liabilities can never go beyond the amount invested in the business by the owners. Had the business instead remained a collection of the owners' personal assets, the personal property of the stakeholders could be liquidated to pay the liabilities of the business, if it runs into financial problems. A corporation may also find it easier to finance itself through loans, allowing creditors in the Grand Junction area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Finally, 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 Colorado may be charged a fee to incorporate. Also, a corporation is taxed as its own entity. Disbursements to the owners of the corporation are also taxed as individual income, so this means earnings may be taxed twice. But this double taxation can be avoided with proper planning and help from a local Grand Junction lawyer.