In Illinois, businesses are allowed to incorporate, thereby becoming their own legal entities. This means that the business can buy or sell property, offer and accept contracts and exercise legal rights in its own name. The office of the Secretary of State is the agency that receives applications for incorporation in Illinois, and they must be completed in conformity with certain guidelines.

Benefits of Incorporation in Illinois

Certain advantages inure to a business in Illinois 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. With unincorporated businesses, personal property of owners can be liquidated in order to fulfill the liabilities of the business. Also, creditors in the Spring Grove area typically prefer to deal with corporations, since a loan is an investment more easily evaluated when the credit-worthiness of various owners is not an issue. 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

Incorporation comes at a price. First, Illinois might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. In other words, the profits a corporation makes are now taxed separately, while any disbursements to shareholders are taxed as individual income. This is called double taxation. However, a business might avoid this disadvantage with proper planning and assistance from a local Spring Grove lawyer.